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NOTE PURCHASE AGREEMENT
Dated as of August 13, 1998
Among
MIDWAY AIRLINES CORPORATION,
THE FIRST NATIONAL BANK OF MARYLAND,
as Pass Through Trustee under each of the
Pass Through Trust Agreements
THE FIRST NATIONAL BANK OF MARYLAND,
as Subordination Agent
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
as Escrow Agent
and
THE FIRST NATIONAL BANK OF MARYLAND,
as Paying Agent
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INDEX TO NOTE PURCHASE AGREEMENT
Page
SECTION 1. Financing of New Aircraft..................................2
SECTION 2. Conditions Precedent.......................................6
SECTION 3. Representations and Warranties.............................7
SECTION 4. Covenants................................................ 11
SECTION 5. Notices.................................................. 11
SECTION 6. Expenses................................................. 11
SECTION 7. Further Assurances....................................... 12
SECTION 8. Miscellaneous............................................ 12
SECTION 9. Governing Law............................................ 13
Schedules
Schedule I New Aircraft and Scheduled Delivery Months
Schedule II Pass Through Trust Agreements
Schedule III Deposit Agreements
Schedule IV Escrow and Paying Agent Agreements
Schedule V Mandatory Document Terms
Schedule VI Mandatory Economic Terms
Schedule VII Aggregate Amortization Schedule
Annex
Annex A Definitions
Exhibits
Exhibit A-1 Form of Leased Aircraft Participation Agreement
Exhibit A-2 Form of Lease
Exhibit A-3 Form of Leased Aircraft Indenture
Exhibit A-4 Form of Leased Aircraft Trust Agreement
Exhibit B Form of Delivery Notice
Exhibit C-1 Form of Owned Aircraft Participation Agreement
Exhibit C-2 Form of Owned Aircraft Indenture
NOTE PURCHASE AGREEMENT
This NOTE PURCHASE AGREEMENT, dated as of August 13, 1998, among (i)
MIDWAY AIRLINES CORPORATION, a Delaware corporation (the "Company"), (ii) THE
FIRST NATIONAL BANK OF MARYLAND ("FNBM"), a national banking association, not in
its individual capacity except as otherwise expressly provided herein, but
solely as trustee (in such capacity together with its successors in such
capacity, the "Pass Through Trustee") under each of the four separate Pass
Through Trust Agreements (as defined below), (iii) THE FIRST NATIONAL BANK OF
MARYLAND, a national banking association, as subordination agent and trustee (in
such capacity together with its successors in such capacity, the "Subordination
Agent") under the Intercreditor Agreement (as defined below), (iv) FIRST UNION
TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association as Escrow
Agent (in such capacity together with its successors in such capacity, the
"Escrow Agent"), under each of the Escrow and Paying Agent Agreements (as
defined below) and (v) THE FIRST NATIONAL BANK OF MARYLAND, a national banking
association, as Paying Agent (in such capacity together with its successors in
such capacity, the "Paying Agent") under each of the Escrow and Paying Agent
Agreements.
W I T N E S S E T H:
WHEREAS, capitalized terms used but not defined herein shall have
the meanings ascribed to such terms in Annex A hereto;
WHEREAS, the Company has obtained commitments from the Manufacturer
pursuant to the Aircraft Purchase Agreement for the delivery of the eight
aircraft listed in Schedule I hereto (together with any aircraft substituted
therefor in accordance with an Aircraft Purchase Agreement prior to the delivery
thereof, the "New Aircraft");
WHEREAS, pursuant to the Pass Through Trust Agreements set forth in
Schedule II hereto, and concurrently with the execution and delivery of this
Agreement, separate grantor trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") have been created to facilitate certain of
the transactions contemplated hereby, including, without limitation, the
issuance and sale of pass through certificates pursuant thereto (collectively,
the "Certificates") to provide for a portion of the financing of the New
Aircraft;
WHEREAS, the Company has entered into the Purchase Agreement dated
as of August 6, 1998 (the "Purchase Agreement") with the two initial purchasers
(the "Initial Purchasers") named therein, which provides that the Company will
cause each Pass Through Trustee to issue and sell the Certificates to the
Initial Purchasers;
WHEREAS, concurrently with the execution and delivery of this
Agreement, (i) the Escrow Agents and the Depositary entered into the Deposit
Agreements set forth in Schedule III hereto (the "Deposit Agreements") whereby
the applicable Escrow Agent agreed to direct the Initial Purchasers to make
certain deposits
referred to therein on the Issuance Date (the "Initial Deposits") and to permit
the applicable Pass Through Trustee to make additional deposits from time to
time thereafter (the Initial Deposits together with such additional deposits are
collectively referred to as the "Deposits") and (ii) the Pass Through Trustees,
the Initial Purchasers, the Paying Agents and the Escrow Agents entered into the
Escrow and Paying Agent Agreements set forth in Schedule IV hereto (the "Escrow
and Paying Agent Agreements") whereby, among other things, (a) the Initial
Purchasers agreed to deliver an amount equal to the amount of the Initial
Deposits to the Depositary on behalf of the applicable Escrow Agent and (b) the
applicable Escrow Agent, upon the Depositary receiving such amount, has agreed
to deliver escrow receipts to be affixed to each Certificate;
WHEREAS, prior to the delivery of each New Aircraft, the Company
will determine whether to enter into a leveraged lease transaction as lessee
with respect to such New Aircraft (a "Leased Aircraft") or to purchase as owner
such New Aircraft (an "Owned Aircraft") and will give to the Pass Through
Trustee a Delivery Notice (as defined below) specifying its election;
WHEREAS, upon receipt of a Delivery Notice with respect to a New
Aircraft, subject to the terms and conditions of this Agreement, the applicable
Pass Through Trustees will enter into the applicable Financing Agreements
relating to such New Aircraft;
WHEREAS, upon the delivery of each New Aircraft, each Pass Through
Trustee will fund its purchase of Equipment Notes with the proceeds of one or
more Deposits withdrawn by the applicable Escrow Agent under the related Deposit
Agreement bearing the same interest rate as the Certificates issued by such Pass
Through Trust; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, (i) ABN AMBRO Bank, N.V., acting through its Chicago branch (the
"Liquidity Provider"), has entered into three revolving credit agreements (each,
a "Liquidity Facility"), one each for the benefit of the Certificateholders of
each Pass Through Trust (other than the Class D Pass Through Trust), with the
Subordination Agent, as agent for the Pass Through Trustee on behalf of each
such Pass Through Trust and (ii)the Pass Through Trustee, the Liquidity
Providers and the Subordination Agent have entered into the Intercreditor
Agreement, dated as of the date hereof (the "Intercreditor Agreement");
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Financing of New Aircraft. (a) The Company confirms that
it has entered into the Aircraft Purchase Agreement with the Manufacturer
pursuant
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to which the Company has agreed to purchase, and the Manufacturer has agreed to
deliver, the New Aircraft in the months specified in Schedule I hereto, all on
and subject to terms and conditions specified in the applicable Aircraft
Purchase Agreement. The Company agrees to finance the New Aircraft in the manner
provided herein, all on and subject to the terms and conditions hereof and of
the relevant Financing Agreements.
(b) In furtherance of the foregoing, the Company agrees to give the
parties hereto, the Depositary and each of the Rating Agencies not less than two
Business Days' prior notice substantially in the form of Exhibit B hereto (a
"Delivery Notice") of the scheduled financing date (the "Scheduled Delivery
Date") (or, in the case of a substitute Delivery Notice under Section 1(d) or
(e) hereof, one Business Day's prior notice) in respect of each New Aircraft
under the Aircraft Purchase Agreement, which notice shall:
(i) specify whether the Company has elected to treat such New
Aircraft as a Leased Aircraft or an Owned Aircraft;
(ii) specify the Scheduled Delivery Date of such New Aircraft
(which shall be a Business Day before the Cut-off Date and, except
as provided in Section 1(e) hereof, the date (the "Funding Date") on
which the financing therefor in the manner provided herein shall be
consummated);
(iii) instruct the Pass Through Trustee to instruct the
relevant Escrow Agent to provide a Notice of Purchase Withdrawal to
the Depositary with respect to the Equipment Notes to be issued in
connection with the financing of such New Aircraft;
(iv) instruct the Pass Through Trustee to enter into the
Participation Agreement included in the Financing Agreements with
respect to such Aircraft in such form and at such a time on or
before the Funding Date specified in such Delivery Notice and to
perform its obligations thereunder;
(v) specify the aggregate principal amount of each series of
Equipment Notes to be issued, and purchased by the Pass Through
Trustees, in connection with the financing of such New Aircraft
scheduled to be delivered on such Funding Date (which shall in all
respects comply with the Mandatory Economic Terms); and
(vi) if such New Aircraft is to be a Leased Aircraft, certify
that the related Owner Participant (A) is not an Affiliate of the
Company and (B) based on the representations of such Owner
Participant, is either (1) a Qualified Owner Participant or (2) any
other person the obligations of which under the Owner Participant
Agreements (as defined in the
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applicable Participation Agreement) are guaranteed by a Qualified
Owner Participant.
(c) Upon receipt of a Delivery Notice, the Pass Through Trustees
shall, and shall cause the Subordination Agent to, enter into and perform their
obligations under the Participation Agreement specified in such Delivery Notice;
provided that, such Participation Agreement and the other Lease Financing
Agreements or Owner Financing Agreements to be entered into pursuant to such
Participation Agreement shall be in the forms thereof annexed hereto in all
material respects with such changes therein as shall have been requested by the
related Owner Participant (in the case of Lease Financing Agreements), agreed to
by the Company, the Pass Through Trustees and the Subordination Agent (to the
extent the interests of the Pass Through Trustees or the Subordination Agent are
adversely affected thereby) and, if modified in any material respect, as to
which Rating Agency Confirmation shall have been obtained from each Rating
Agency by the Company (to be delivered by the Company to the applicable Pass
Through Trustee on or before the relevant Delivery Date, it being understood
that if Rating Agency Confirmation shall have been received with respect to any
Financing Agreements and such Financing Agreements are utilized for subsequent
New Aircraft without material modifications, no additional Rating Agency
Confirmation shall be required); provided, however, that the relevant Financing
Agreements as executed and delivered shall not vary the Mandatory Economic Terms
and shall contain the Mandatory Document Terms. Notwithstanding the foregoing,
if any Financing Document annexed hereto shall not have been reviewed by either
Rating Agency prior to the Issuance Date, then, prior to the use thereof in
connection with the financing of any Aircraft hereunder, the Company shall
obtain from each Rating Agency a confirmation that the use of such Financing
Documents would not result in (i) a reduction of the rating for any Class of
Certificates below the then current rating for such Class of Certificates or
(ii) a withdrawal or suspension of the rating of any Class of Certificates. With
respect to each New Aircraft, the Company shall cause FNBM (or such other person
that meets the eligibility requirements to act as loan trustee under the Leased
Aircraft Indenture or Owned Aircraft Indenture) to execute as Loan Trustee the
Financing Agreements relating to such Aircraft to which such Loan Trustee is
intended to be a party, and shall concurrently therewith execute such Financing
Agreements to which the Company is intended to be a party and perform its
respective obligations thereunder. Upon the request of either Rating Agency, the
Company shall deliver or cause to be delivered to each Rating Agency a true and
complete copy of each Financing Agreement relating to the financing of each New
Aircraft together with a true and complete set of the closing documentation
(including legal opinions) delivered to the related Loan Trustee, Subordination
Agent and Pass Through Trustee under the related Participation Agreement.
(d) If after giving any Delivery Notice, there shall be a delay in
the delivery of a New Aircraft, or if on the Scheduled Delivery Date of a New
Aircraft the financing thereof in the manner contemplated hereby shall not be
consummated for whatever reason, the Company shall give the parties hereto
prompt notice thereof. Concurrently with the giving of such notice of
postponement or subsequently, the
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Company shall give the parties hereto a substitute Delivery Notice specifying
the date to which such delivery and related financing shall have been
re-scheduled (which shall be a Business Day before the Cut-off Date on which the
Escrow Agents shall be entitled to withdraw one or more Deposits under each of
the applicable Deposit Agreements to enable each applicable Pass Through Trustee
to fund its purchase of the related Equipment Notes). Upon receipt of any such
notice of postponement, each applicable Pass Through Trustee shall comply with
its obligations under Section 2.01 of each of the Pass Through Trust Agreements
and thereafter the financing of the relevant New Aircraft shall take place on
the re-scheduled Delivery Date therefor (all on and subject to the terms and
conditions of the relevant Financing Agreements) unless further postponed as
provided herein.
(e) Anything in this Section 1 to the contrary notwithstanding, the
Company shall have the right at any time on or before the Scheduled Delivery
Date of any New Aircraft, and subsequent to its giving a Delivery Notice
therefor, to postpone the Scheduled Delivery Date of such New Aircraft so as to
enable the Company to change its election to treat such New Aircraft as a Leased
Aircraft or an Owned Aircraft by written notice of such postponement to the
other parties hereto. The Company shall subsequently give the parties hereto a
substitute Delivery Notice complying with the provisions of Section l(b) hereof
and specifying the new Funding Date for such postponed New Aircraft (which shall
be a Business Day occurring before the Cut-off Date and on which the Escrow
Agent shall be entitled to withdraw Deposits under each of the applicable
Deposit Agreements sufficient to enable each applicable Pass Through Trustee to
fund its purchase of the related Equipment Notes). In addition, the Company
shall have the further right, anything in this Section 1 to the contrary
notwithstanding, to accept delivery of a New Aircraft under the applicable
Aircraft Purchase Agreement on the Delivery Date thereof by utilization of
bridge financing of such New Aircraft and thereafter give the parties hereto a
Delivery Notice specifying a Funding Date not later than 60 days after the
Delivery Date of such New Aircraft and no later than the Cut-off Date and
otherwise complying with the provisions of Section 1(b) hereof. All other terms
and conditions of this Note Purchase Agreement shall apply to the financing of
any such New Aircraft on the re-scheduled Funding Date therefor except (i)the
re-scheduled Funding Date shall be deemed the Delivery Date of such New Aircraft
for all purposes of this Section 1 and (ii)the related Financing Agreements
shall be amended to reflect the original delivery of such New Aircraft to the
Company.
(f) The Company shall have no liability for the failure of the Pass
Through Trustees to purchase Equipment Notes with respect to any New Aircraft,
other than the Company's obligation, if any, to pay the Deposit Make- Whole
Premium pursuant to Section 4(a)(i) of this Agreement.
(g) The parties agree that if, in connection with the delivery of a
New Aircraft, any Owner Participant who is to be a party to any Lease Financing
Agreement shall not be a "Citizen of the United States" within the meaning of
Section 40102(a)(15) of the Act, then the applicable Lease Financing Agreements
shall be modified,
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consistent with the Mandatory Document Terms, to require such Owner Participant
to enter into a voting trust, voting powers or similar arrangement satisfactory
to the Company that (A) enables such New Aircraft to be registered in the United
States and (B) complies with the FAA regulations issued under the Act applicable
thereto.
(h) Anything herein to the contrary notwithstanding, the Company
shall not have the right, and shall not be entitled, at any time to request the
issuance of Equipment Notes of any series to any Pass Through Trustee in an
aggregate principal amount in excess of the amount of the Deposits then
available for withdrawal by the Escrow Agent under and in accordance with the
provisions of the related Deposit Agreement.
(i) The Company hereby agrees to give notice to the Pass Through
Trustee on the date on which Equipment Notes issued with respect to all New
Aircraft have been purchased by the Pass Through Trustee in accordance with this
Agreement; the Pass Through Trustee hereby agrees to give a copy of such notice
to the Escrow Agent and the Paying Agent.
(j) In the event that an increase in the interest rate applicable to
the Certificates shall become effective pursuant to the Registration Rights
Agreement, the Company shall give immediate notice thereof to the Escrow Agent
and the Pass Through Trustee, indicating the effective date of such increase.
Immediately upon receipt of such notice, the Escrow Agent shall deliver the
Increase Notice (in the form of Exhibit C to the Deposit Agreement) to the
Depositary. In the event that, at any time thereafter, the foregoing increase in
interest rate is no longer required by the terms of the Registration Rights
Agreement, the Company shall give immediate notice thereof to the Escrow Agent
and the Pass Through Trustee, indicating, the effective date of such decrease.
Immediately upon receipt of such notice, the Escrow Agent shall deliver the
Rescission Notice (in the form of Exhibit D to the Deposit Agreement) to the
Depositary.
SECTION 2. Conditions Precedent. The obligation of the Pass Through
Trustees to enter into, and to cause the Subordination Agent to enter into, any
Participation Agreement as directed pursuant to a Delivery Notice and to perform
its obligations under such Participation Agreement is subject to satisfaction of
the following conditions:
(a) no Triggering Event shall have occurred; and
(b) the Company shall have delivered a certificate to each such Pass
Through Trustee, the Subordination Agent and each Liquidity Provider stating
that (i) such Participation Agreement and the other Financing Agreements to be
entered into pursuant to such Participation Agreement do not vary the Mandatory
Economic Terms and contain the Mandatory Document Terms and (ii)any substantive
modification of such Financing Agreements from the forms thereof attached to
this Agreement do not materially and adversely affect the Certificateholders or
the Pass Through Trustee, and
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such certification shall be true and correct (it being agreed that a shortening
of (x) any grace period specified in the definition of "Event of Loss" or (y)
any of the grace periods relating to Events of Default, in each case in the form
of Lease attached hereto, would not materially adversely affect the
Certificateholders). The Pass Through Trustee shall be entitled to rely upon
such certificate and shall have no duty to determine the truth or accuracy of
any representation made therein.
Anything herein to the contrary notwithstanding, the obligation of
each Pass Through Trustee to purchase Equipment Notes shall terminate on the
Cut-off Date.
SECTION 3. Representations and Warranties. (a) The Company
represents and warrants that:
(i) the Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware and is a "citizen of the United States" as defined in 49
U.S.C. Section 40102, and has the full corporate power, authority
and legal right under the laws of the State of Delaware to execute
and deliver this Agreement and each Financing Agreement to which it
will be a party and to carry out the obligations of the Company
under this Agreement and each Financing Agreement to which it will
be a party;
(ii) the execution and delivery by the Company of this
Agreement and the performance by the Company of its obligations
under this Agreement have been duly authorized by the Company and
will not violate its Certificate of Incorporation or by-laws or the
provisions of any indenture, mortgage, contract or other agreement
to which it is a party or by which it is bound; and
(iii) this Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against it in accordance with
its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at law or
in equity.
(b) FNBM represents and warrants that:
(i) FNBM is a national banking association duly incorporated,
validly existing and in good standing under the laws of the United
States, and has the full corporate power, authority and legal right
under the laws of the State of Maryland and the United States
pertaining to its banking and trust powers to execute and deliver
this Agreement and each Financing Agreement to which it will be a
party and to carry out the obligations of FNBM, in its capacity as
Subordination Agent, Pass
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Through Trustee or Paying Agent, as the case may be, under this
Agreement and each Financing Agreement to which it will be a party;
(ii) the execution and delivery by FNBM, in its capacity as
Subordination Agent, Pass Through Trustee or Paying Agent, as the
case may be, of this Agreement and the performance by FNBM, in its
capacity as Subordination Agent, Pass Through Trustee or Paying
Agent, as the case may be, of its obligations under this Agreement
have been duly authorized by FNBM, in its capacity as Subordination
Agent, Pass Through Trustee or Paying Agent, as the case may be, and
will not violate its articles of association or by-laws or the
provisions of any indenture, mortgage, contract or other agreement
to which it is a party or by which it is bound;
(iii) this Agreement constitutes the legal, valid and binding
obligations of FNBM, in its capacity as Subordination Agent, Pass
Through Trustee or Paying Agent, as the case may be, enforceable
against it in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether considered in
a proceeding at law or in equity; and
(iv) FNBM has made a filing with the New York State Banking
Department pursuant to Section 131(3) of the New York State Banking
Law with respect to each Pass Through Trust.
(c) The Pass Through Trustee hereby confirms to each of the other
parties hereto that its representations and warranties set forth in Section 7.15
of the Pass Through Trust Agreements are true and correct as of the date hereof.
(d) The Subordination Agent represents and warrants that:
(i) the Subordination Agent is a national banking association
duly incorporated, validly existing and in good standing under the
laws of the United States, and has the full corporate power,
authority and legal right under the laws of the State of Maryland
and the United States pertaining to its banking and trust powers to
execute and deliver this Agreement and each Financing Agreement to
which it is or will be a party and to perform its obligations under
this Agreement and each Financing Agreement to which it is or will
be a party;
(ii) this Agreement has been duly authorized, executed and
delivered by the Subordination Agent; this Agreement constitutes the
legal, valid and binding obligations of the Subordination Agent
enforceable against it in accordance with its terms, except as the
same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or
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similar laws affecting the rights of creditors generally and by
general principles of equity, whether considered in a proceeding at
law or in equity;
(iii) none of the execution, delivery and performance by the
Subordination Agent of this Agreement contravenes any law, rule or
regulation of the State of Maryland or any United States
governmental authority or agency regulating the Subordination
Agent's banking or trust powers or any judgment or order applicable
to or binding on the Subordination Agent and do not contravene the
Subordination Agent's articles of association or by- laws or result
in any breach of, or constitute a default under, any agreement or
instrument to which the Subordination Agent is a party or by which
it or any of its properties may be bound;
(iv) neither the execution and delivery by the Subordination
Agent of this Agreement nor the consummation by the Subordination
Agent of any of the transactions contemplated hereby requires the
consent or approval of, the giving of notice to, the registration
with, or the taking of any other action with respect to, any
Maryland governmental authority or agency or any federal
governmental authority or agency regulating the Subordination
Agent's banking or trust powers;
(v) there are no Taxes payable by the Subordination Agent
imposed by the State of Maryland or any political subdivision or
taxing authority thereof in connection with the execution, delivery
and performance by the Subordination Agent of this Agreement (other
than franchise or other taxes based on or measured by any fees or
compensation received by the Subordination Agent for services
rendered in connection with the transactions contemplated by the
Intercreditor Agreement or any of the Liquidity Facilities), and
there are no Taxes payable by the Subordination Agent imposed by the
State of Maryland or any political subdivision thereof in connection
with the acquisition, possession or ownership by the Subordination
Agent of any of the Equipment Notes (other than franchise or other
taxes based on or measured by any fees or compensation received by
the Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of
the Liquidity Facilities); and
(vi) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative
agency which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability of
the Subordination Agent to perform its obligations under this
Agreement.
(e) The Escrow Agent represents and warrants that:
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(i) the Escrow Agent is a national banking association duly
incorporated, validly existing and in good standing under the laws
of the United States and has the full corporate power, authority and
legal right under the laws of the United States pertaining to its
banking, trust and fiduciary powers to execute and deliver this
Agreement, each Deposit Agreement and each Escrow and Paying Agent
Agreement (collectively, the "Escrow Agent Agreements") and to carry
out the obligations of the Escrow Agent under each of the Escrow
Agent Agreements;
(ii) the execution and delivery by the Escrow Agent of each of
the Escrow Agent Agreements and the performance by the Escrow Agent
of its obligations hereunder and thereunder have been duly
authorized by the Escrow Agent and will not violate its articles of
association or by-laws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it is
bound; and
(iii) each of the Escrow Agent Agreements constitutes the
legal, valid and binding obligations of the Escrow Agent enforceable
against it in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether considered in
a proceeding at law or in equity.
(f) The Paying Agent represents and warrants that:
(i) the Paying Agent is a national banking association duly
incorporated, validly existing and in good standing under the laws
of the United States and has the full corporate power, authority and
legal right under the laws of Maryland and the United States
pertaining to its banking and trust powers to execute and deliver
this Agreement and the Escrow and Paying Agent Agreement
(collectively, the "Paying Agent Agreements") and to carry out the
obligations of the Paying Agent under each of the Paying Agent
Agreements;
(ii) the execution and delivery by the Paying Agent of each of
the Paying Agent Agreements and the performance by the Paying Agent
of its obligations hereunder and thereunder have been duly
authorized by the Paying Agent and will not violate its articles of
association or by-laws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it is
bound; and
(iii) each of the Paying Agent Agreements constitutes the
legal, valid and binding obligations of the Paying Agent enforceable
against it in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar
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laws affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at law or
in equity.
SECTION 4. Covenants. The Company covenants with each of the other
parties hereto that:
(i) on the date that the Depositary is obligated to pay the
amount of the Final Withdrawal to the Paying Agent pursuant to a
Deposit Agreement relating to any Trust, the Company shall pay to
the Pass Through Trustee of such Trust no later than 12:30 p.m. (New
York time) an amount equal to the Deposit Make-Whole Premium, if
any, required to be paid in respect of such Final Withdrawal amount;
(ii) Sections 5.01 and 5.02 of each Pass Through Trust
Agreement are hereby incorporated by reference herein; and
(iii) the Company agrees to provide written notice to each of
the parties hereto of the occurrence of the Cut-off Date no later
than one Business Day after the date thereof; such notice to refer
specifically to the Pass Through Trustee's obligation to assign,
transfer and deliver all of its right, title and interest to the
Trust Property (as defined in each Pass Through Trust Agreement) to
the trustee of the Related Trust (as defined in each Pass Through
Trust Agreement) in accordance with Section 11.01 of each of the
Pass Through Trust Agreement.
SECTION 5. Notices. Unless otherwise specifically provided herein,
all notices required or permitted by the terms of this Agreement shall be in
English and in writing, and any such notice shall become effective upon being
delivered personally or, if promptly confirmed by mail, when dispatched by
facsimile or other written telecommunication, addressed to such party hereto at
its address or facsimile number set forth below the signature of such party at
the foot of this Agreement.
SECTION 6. Expenses. (a) The Company agrees to pay to the
Subordination Agent when due an amount or amounts equal to the fees payable to
the relevant Liquidity Provider under Section 2.3 of each Liquidity Facility
multiplied by a fraction the numerator of which shall be the then outstanding
aggregate amount of the Deposits under the Deposit Agreements and the
denominator of which shall be the sum of (x) the then outstanding aggregate
principal amount of the Series A Equipment Notes, Series B Equipment Notes and
Series C Equipment Notes issued under all of the Indentures and (y) the then
outstanding aggregate amount of the Deposits under the Deposit Agreements.
(b) So long as no Equipment Notes have been issued in respect of any
Aircraft, the Company agrees to pay (i) to the Subordination Agent when due (A)
the amount equal to interest on any Downgrade Advance (other than any Applied
Downgrade Advance) payable under Section 3.7(a) of each Liquidity Facility minus
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Investment Earnings while such Downgrade Advance shall be outstanding, (B) the
amount equal to interest on any Non Extension Advance (other than any Applied
Non-Extension Advance) payable under Section 3.7(a) of each Liquidity Facility
minus Investment Earnings while such Non-Extension Advance shall be outstanding
and (C) any other amounts owed to the Liquidity Provider by the Subordination
Agent as borrower under each Liquidity Facility (other than amounts due as
repayment of advances thereunder or as interest on such advances, except to the
extent payable pursuant to clause (A) or (B) above), (ii) all compensation and
reimbursement of expenses, disbursements and advances payable by the Company
under the Pass Through Trust Agreements, (iii) all compensation and
reimbursement of expenses and disbursements payable to the Subordination Agent
under the Intercreditor Agreement except with respect to any income or franchise
taxes incurred by the Subordination Agent in connection with any fees or other
compensation payable to the Subordination Agent for services rendered by it
pursuant to the terms of the Intercreditor Agreement or the Participation
Agreement and (iv) in the event the Company requests any amendment to any
Operative Agreement, all reasonable fees and expenses (including, without
limitation, fees and disbursements of counsel) of the Pass Through Trustee, the
Subordination Agent, the Escrow Agent and/or the Paying Agent in connection
therewith. For purposes of this Section 6(b), the terms "Applied Downgrade
Advance", "Applied Non-Extension Advance", "Downgrade Advance", "Investment
Earnings" and Non-Extension Advance" shall have the meanings specified in each
Liquidity Facility.
SECTION 7. Further Assurances. Each party hereto shall duly execute,
acknowledge and deliver, or shall cause to be executed, acknowledged and
delivered, all such further agreements, instruments, certificates or documents,
and shall do and cause to be done such further acts and things, in any case, as
any other party hereto shall reasonably request in connection with its
administration of, or to carry out more effectually the purposes of, or to
better assure and confirm unto it the rights and benefits to be provided under,
this Agreement.
SECTION 8. Miscellaneous. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations, warranties and agreements herein of the Company,
the Subordination Agent, the Escrow Agent, the Paying Agent and the Pass Through
Trustee, and the Company's, the Subordination Agent's, the Escrow Agent's, the
Paying Agent's and the Pass Through Trustee's obligations under any and all
thereof, shall survive the expiration or other termination of this Agreement and
the other agreements referred to herein.
(b) This Agreement may be executed in any number of counterparts
(and each of the parties hereto shall not be required to execute the same
counterpart). Each counterpart of this Agreement, including a signature page
executed by each of the parties hereto, shall be an original counterpart of this
Agreement, but all of such counterparts together shall constitute one
instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by the party against which the
-12-
enforcement of the termination, amendment, supplement, waiver or modification is
sought. The index preceding this Agreement and the headings of the various
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the benefit of, the
Company and its successors and permitted assigns, the Pass Through Trustee and
its successors as Pass Through Trustee (and any additional trustee appointed)
under any of the Pass Through Trust Agreements, the Escrow Agent and its
successors as Escrow Agent under the Escrow and Paying Agent Agreements, the
Paying Agent and its successors as Paying Agent under the Escrow and Paying
Agent Agreement and the Subordination Agent and its successors as Subordination
Agent under the Intercreditor Agreement.
(c) This Agreement is not intended to, and shall not, provide any
person not a party hereto (other than the Initial Purchasers and each of the
beneficiaries of Section 6 hereof) with any rights of any nature whatsoever
against any of the parties hereto, and no person not a party hereto (other than
the Initial Purchasers and each of the beneficiaries of Section 6 hereof) shall
have any right, power or privilege in respect of, or have any benefit or
interest arising out of, this Agreement.
SECTION 9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THIS AGREEMENT
IS BEING DELIVERED IN THE STATE OF NEW YORK.
-13-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
MIDWAY AIRLINES CORPORATION
By /s/ Xxxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Senior Vice President
General Counsel
Address: 000 X. Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx Xxxxxxxx 00000
Attention: General Counsel
Telefax: (000) 000-0000
THE FIRST NATIONAL BANK OF MARYLAND, not
in its individual capacity, except as
otherwise provided herein, but solely as
Pass Through Trustee, Subordination Agent
and Paying Agent
By /s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Assistant Vice President
Address: 00 Xxxxx Xxxxxxx Xxxxxx
Mail Code 101-591
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust
Department
Telefax: (000) 000-0000
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By /s/ Xxxxxxx X. Xxxx
---------------------------------------
Name: XXXXXXX X. XXXX
Title: VICE PRESIDENT
Address: One Xxxxxx Square
000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust
Administration
Telefax: (000) 000-0000
SCHEDULE I TO
NOTE PURCHASE AGREEMENT
NEW AIRCRAFT AND SCHEDULED DELIVERY MONTHS
New Aircraft Aircraft Tail Scheduled
Type Number* Delivery Months**
------------------- ---------------- ----------------------
Canadian
Regional Jet
Series 200 ER N575ML September 1998
Canadian
Regional Jet
Series 200 ER N576ML September 1998
Canadian
Regional Jet
Series 200 ER N577ML November 1998
Canadian
Regional Jet
Series 200 ER N578ML November 1998
Canadian
Regional Jet
Series 200 ER N579ML December 1998
Canadian
Regional Jet
Series 200 ER N580ML January 1999
Canadian
Regional Jet
Series 200 ER N581ML April 1999
Canadian
Regional Jet
Series 200 ER N582ML June 1999
----------
* The tail number identified with respect to each Aircraft is a projection only,
based on the current manufacturing schedule of the manufacturer. A different
aircraft may actually be delivered to the Company by the manufacturer on any
delivery date and in such case such substituted aircraft shall be an "Aircraft"
for purposes of the Note Purchase Agreement.
** The dates reflect the scheduled delivery months under the Aircraft Purchase
Agreement. The actual delivery date for any such Aircraft may be subject to
delay by the manufacturer.
SCHEDULE II TO
NOTE PURCHASE AGREEMENT
PASS THROUGH TRUST AGREEMENTS
Pass Through Trust Agreement dated as of the Issuance Date between the Company
and the Pass Through Trustee in respect of Midway Airlines Pass Through Trust,
Series 1998-1A-O.
Pass Through Trust Agreement dated as of the Issuance Date between the Company
and the Pass Through Trustee in respect of Midway Airlines Pass Through Trust,
Series 1998-1B-O.
Pass Through Trust Agreement dated as of the Issuance Date between the Company
and the Pass Through Trustee in respect of Midway Airlines Pass Through Trust,
Series 1998-1C-O.
Pass Through Trust Agreement dated as of the Issuance Date between the Company
and the Pass Through Trustee in respect of Midway Airlines Pass Through Trust,
Series 1998-1D-O.
SCHEDULE III TO
NOTE PURCHASE AGREEMENT
DEPOSIT AGREEMENTS
Deposit Agreement (Class A) dated as of the Issuance Date between the Depositary
and the Escrow Agent.
Deposit Agreement (Class B) dated as of the Issuance Date between the Depositary
and the Escrow Agent.
Deposit Agreement (Class C) dated as of the Issuance Date between the Depositary
and the Escrow Agent.
Deposit Agreement (Class D) dated as of the Issuance Date between the Depositary
and the Escrow Agent.
SCHEDULE IV TO
NOTE PURCHASE AGREEMENT
ESCROW AND PAYING AGENT AGREEMENTS
Escrow and Paying Agent Agreement (Class A) dated as of the Issuance Date among
the Escrow Agent, the Initial Purchasers, the Pass Through Trustee and the
Paying Agent.
Escrow and Paying Agent Agreement (Class B) dated as of the Issuance Date among
the Escrow Agent, the Initial Purchasers, the Pass Through Trustee and the
Paying Agent.
Escrow and Paying Agent Agreement (Class C) dated as of the Issuance Date among
the Escrow Agent, the Initial Purchasers, the Pass Through Trustee and the
Paying Agent.
Escrow and Paying Agent Agreement (Class D) dated as of the Issuance Date among
the Escrow Agent, the Initial Purchasers, the Pass Through Trustee and the
Paying Agent.
SCHEDULE V TO
NOTE PURCHASE AGREEMENT
MANDATORY DOCUMENT TERMS
1. May not modify in any material adverse respect the Granting Clause of the
Indenture Form so as to deprive the Holders of a first priority security
interest in and mortgage lien on the Aircraft, the Lease and certain of
Midway's rights under the Aircraft Purchase Agreement or to eliminate any
of the obligations secured thereby or otherwise modify in any material
adverse respect as regards the interests of the Holders, the Subordination
Agent, the Liquidity Providers or the Loan Trustee the provisions of
Article II, V, or VI or Section 7.01, 7.02, 7.10, 7.11, 9.08, 13.01,
13.02, 13.07, 15.04, 15.13 or Article VIII of the Indenture Form;
2. May not modify in any material adverse respect as regards the interests of
the Holders, the Subordination Agent, the Liquidity Providers or the
Indenture Trustee the provisions of Section 3(b), 3(e), 3(f), 3(g),
8(d)(vii), the first sentence of Section 9(c), 20(b) or 23(e) of the Lease
or otherwise modify the terms of the Lease so as to deprive the Loan
Trustee of rights expressly granted to the "Indenture Trustee" therein;
3. May not modify in any material adverse respect as regards the interests of
the Holders, the Subordination Agent, the Pass Through Trustee the
Liquidity Providers or the Loan Trustee the provisions of Section 3.01(i),
3.01(j), 3.01(k), 3.01(l), 3.01(r), 4.02(a), 15.08, 15.09 or 15.10 of the
Participation Agreement or of the provisions of Section 3.01(b)(xviii) of
the Participation Agreement so as to eliminate the requirement to deliver
to the Loan Trustee the legal opinions to be provided to such Persons
thereunder (recognizing that the lawyers rendering such opinions may be
changed) or of the provisions of Section 4.02(b) of the Participation
Agreement as regards the rights of the Loan Trustee thereunder or
otherwise modify the terms of the Participation Agreement to deprive, the
Pass Through Trustee, the Subordination Agent, the Liquidity Providers or
the Loan Trustee of any indemnity or right of reimbursement in its favor
for Expenses or Taxes; and
4. May not modify in any material adverse respect as regards the interests of
the holders of the Pass Through Certificates, the Pass Through Trustee,
the Subordination Agent, the Liquidity Providers or the Loan Trustee, the
definition of "Supplemental Rent" in Appendix A to the Participation
Agreement.
Notwithstanding the foregoing, any such Mandatory Document Term may be
modified to correct or supplement any such provision which may be defective or
to cure any ambiguity or correct any mistake, provided that any such action
shall not materially adversely affect the interests of the Holders, the Pass
Through Trustee the Subordination Agent, the Liquidity Providers, the Indenture
Trustee or the holders of the Pass Through Certificates.
SCHEDULE VI TO
NOTE PURCHASE AGREEMENT
MANDATORY ECONOMIC TERMS
Equipment Notes
(i) The maximum principal amount of all the Equipment Notes issued with
respect to an Aircraft shall not exceed the maximum principal amount of
Equipment Notes indicated for each such Aircraft as set forth in the Offering
Memorandum under "Offering Memorandum Summary -- Equipment Notes and the
Aircraft" under the column "Maximum Principal Amount of Equipment Notes";
(ii) The initial loan to aircraft value with respect to an Aircraft (with
the value of any Aircraft for these purposes to equal the value for such
Aircraft set forth in the Offering Memorandum under "Offering Memorandum Summary
-- Equipment Notes and the Aircraft" under the column "Appraised Value"), shall
not exceed 36.7% in the case of Series A Equipment Notes, 52.6% in the case of
Series B Equipment Notes, 65.5% in the case of Series C Equipment Notes, and
69.0% in the case of the Series D Equipment Notes;
(iii) The initial average life of the Series A Equipment Notes shall not
extend beyond 11.8 years, of the Series B Equipment Notes shall not extend
beyond 10.8 years, of the Series C Equipment Notes shall not extend beyond 5.5
years and of the Series D Equipment Notes shall not extend beyond 3.6 years, in
each case from the Issuance Date;
(iv) As of the first Regular Distribution Date immediately following the
Delivery Period Termination Date (or if earlier, the date of the occurrence of a
Triggering Event), and after giving effect to any Regular Distribution required
to be made on such date, the average life of the Class A Certificates, the Class
B Certificates, the Class C Certificates and the Class D Certificates shall not
extend beyond, respectively, 11.3 years, 10.3 years, 5.0 years and 3.1 years
from the Issuance Date (computed without regard to the acceleration of any
Equipment Notes and after giving effect to any special distribution on the
Certificates thereafter required in respect of unused Deposits);
(v) The final maturity date of (a) the Series A Equipment Notes shall not
be in excess of 16.4 years after the Issuance Date, (b) the Series B Equipment
Notes shall not be in excess of 14.4 years after the Issuance Date, (c) the
Series C Equipment Notes shall not be in excess of 9.4 years after the Issuance
Date and (d) the Series D Equipment Notes shall not be in excess of 4.4 years
after the Insurance Date;
(vi) The original aggregate principal amount of all of the Equipment Notes
of each Series shall not exceed the original aggregate face amount of the
Certificates issued by the corresponding Trust;
(vii) The interest rate and the January 2 and July 2 payment dates for the
Equipment Notes may not be changed;
(viii) Basic Rent and Termination Values under the related Lease must be
sufficient to pay amounts due with respect to the Equipment Notes;
(ix) The amounts payable under the all-risk aircraft hull insurance
maintained with respect to the Aircraft must be sufficient to pay the
Termination Value, subject to certain rights of self-insurance; and
(x) (i) the Past Due Rate in the Indenture and the Lease;
(ii) the Make-Whole Premium payable under the Indenture;
(iii) the provisions relating to the prepayment and purchase of the
Equipment Notes in the Indenture;
(iv) the Minimum Liability Amount; and
(v) the indemnification of the Loan Trustee, Subordination Agent,
Liquidity Providers, the Escrow Agents, the Pass-Through
Trustee and the Holders of the Equipment Notes with respect to
certain taxes and expenses;
in each case, must be provided as set forth in the Participation
Agreement, Lease and Indenture, as the case may be (or in the case of
clause (iv), may be in a greater amount, or in the case of clause (v), may
provide for modifications to such indemnification provisions so long as
such modifications are not materially adverse to the Loan Trustee,
Subordination Agent, Liquidity Providers or the Pass Through Trustee).
-2-
SCHEDULE VII TO
NOTE PURCHASE AGREEMENT
AGGREGATE AMORTIZATION SCHEDULE
1998-A Trust 1998-1B Trust 1998-1C Trust 1998-1D Trust
Equipment Equipment Equipment Equipment
Notes Notes Notes Notes
Scheduled Scheduled Scheduled Scheduled
Payments of Payments of Payments of Payments of
Date Principal Principal Principal Principal
------- --------- --------- --------- ---------
January 2, 1999 $ 0.00 $ 0.00 $3,140,641.00 $ 0.00
July 2, 1999 0.00 0.00 1,282,476.90 31,848.28
January 2, 2000 1,752,101.00 758,368.00 1,151,227.67 215,115.53
January 2, 2001 1,752,801.00 758,968.00 358,457.45 1,872,580.82
January 2, 2002 1,752,801.00 758,968.00 0.00 2,818,189.45
January 2, 2003 1,752,801.00 758,968.00 2,766,930.58 564,265.92
January 2, 2004 1,752,801.00 1,041,906.00 3,544,570.09 0.00
January 2, 2005 1,752,801.00 3,204,040.03 1,919,236.35 0.00
January 2, 2006 1,752,801.00 2,311,568.47 2,118,822.86 0.00
January 2, 2007 3,171,660.38 1,504,236.81 670,413.99 0.00
January 2, 2008 880,785.00 1,308,256.00 3,575,223.11 0.00
January 2, 2009 5,372,889.53 1,133,734.08 0.00 0.00
January 2, 2010 8,360,092.14 0.00 0.00 0.00
January 2, 2011 7,993,667.25 0.00 0.00 0.00
January 2, 2012 5,376,025.87 2,842,465.90 0.00 0.00
January 2, 2013 0.00 8,887,525.93 0.00 0.00
January 2, 2014 9,591,782.06 0.00 0.00 0.00
January 2, 2015 5,410,190.77 0.00 0.00 0.00
ANNEX A TO
NOTE PURCHASE AGREEMENT
DEFINITIONS
"Act" means 49 U.S.C. ss. ss. 40101-46507.
"Adjusted Treasury Yield" means the Treasury Yield plus, in the case of a
distribution to holders of Class A Certificates, 170 basis points, in the case
of a distribution to holders of Class B Certificates 270 basis points and in the
case of a distribution to holders of Class C Certificates and the Class D
Certificates, 350 basis points.
"Affiliate" means, with respect to any person, any other person directly or
indirectly controlling, controlled by or under common control with such person.
For purposes of this definition, "control" means the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such person, whether through the ownership of voting securities or by contract
or otherwise and "controlling," "controlled by" and "under common control with"
have correlative meanings.
"Aircraft Purchase Agreement" means Bombardier Regional Aircraft Division
Purchase Agreement No. PA-0393 dated September 17, 1997, as amended, between the
Company and the Manufacturer (including all exhibits thereto, together with all
letter agreements entered into that by their terms constitute part of any such
Purchase Agreement).
"Aircraft Purchase Agreement Assignment" means a Purchase Agreement and Engine
Warranties Assignment substantially in the form of Exhibit A-4 to the Note
Purchase Agreement.
"Assumed Amortization Schedule" means Schedule VII to the Note Purchase
Agreement.
"Average Life Date" means, for any Equipment Note, the date which follows the
time of determination by a period equal to the Remaining Weighted Average Life
of such Equipment Note.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C. ss. ss. 102
et seq.
"Business Day" means any day, other than a Saturday, Sunday or other day on
which commercial banks are authorized or required by law to close in New York,
New York, Durham, North Carolina, Baltimore, Maryland or Wilmington, Delaware.
"Certificate" has the meaning set forth in the third recital to the Note
Purchase Agreement.
"Certificateholder" means the Person in whose name a Certificate is registered
in the Register.
"Class" means the class of Certificates issued by each Pass Through Trust.
"Company" means Midway Airlines, Inc., a Delaware corporation.
"Corporate Trust Office" with respect to any Pass Through Trustee or any Loan
Trustee, means the office of such trustee in the city at which at any particular
time its corporate trust business shall be principally administered.
"Cut-off Date" means the earlier of (a) the day after the Delivery Period
Termination Date and (b) the date on which a Triggering Event occurs.
"Delivery Period Termination Date" means the earlier of (a) September 30, 1999
(provided that, if a labor strike occurs at the Manufacturer prior to such date,
such date shall be extended by adding thereto the number of days that such
strike has continued in effect) and (b) the date on which Equipment Notes issued
with respect to all of the New Aircraft have been purchased by the Pass Through
Trustees in accordance with the Note Purchase Agreement.
"Delivery Date" means the Business Day on which a New Aircraft is delivered to
and accepted by the Company as contemplated by the Note Purchase Agreement
(subject to the provisions of Section 1(e)).
"Delivery Notice" has the meaning set forth in Section 1(b) of the Note Purchase
Agreement.
"Deposit" has the meaning set forth in the fifth recital to the Note Purchase
Agreement.
"Deposit Agreement" has the meaning set forth in the fifth recital to the Note
Purchase Agreement.
"Deposit Make-Whole Premium" means, with respect to the distribution of unused
Deposits to holders of any Class of Certificates as of any date of
determination, an amount equal to the excess, if any, of (a) the present value
of the excess of (i) the scheduled payment of principal and interest to maturity
of the Equipment Notes, assuming the maximum principal amount thereof (the
"Maximum Amount") minus such Class of Certificates' Pro Rata Share were issued,
on each remaining Regular Distribution Date for such Class under the Assumed
Amortization Schedule (assuming for purposes of giving effect to the subtraction
above, if such Class of Certificates' Pro Rata Share is greater than zero, that
each scheduled payment of principal on such Schedule is reduced in an amount
equal to such scheduled payment multiplied by a fraction, the numerator of which
shall be the Pro Rata Share and the denominator of which shall be the Maximum
Amount) over (ii) the scheduled payment of principal and interest to maturity of
the Equipment Notes actually acquired by the Pass Through Trustee for such Class
on each such Regular Distribution Date, such present value computed by
discounting such excess on a semiannual basis on each Regular Distribution Date
(assuming a 360-day year of twelve 30-day months) using a discount
A-2
rate equal to the Adjusted Treasury Yield over (b) the amount of such unused
Deposits to be distributed to the holders of such Certificates minus such Class
of Certificates' Pro Rata Share (the remainder of such subtraction, the "Net
Deposits") plus accrued and unpaid interest on the Net Deposits to but excluding
such date of determination from and including the preceding Regular Distribution
Date (or if such date of determination precedes the first Regular Distribution
Date, the Issuance Date).
"Depositary" means First Union National Bank.
"Equipment Notes" means and includes any equipment notes issued under any
Indenture in the form specified in Section 2.01 thereof (as such form may be
varied pursuant to the terms of such Indenture) and any Equipment Note issued
under any Indenture in exchange for or replacement of any other Equipment Note.
"Escrow Agent" has the meaning set forth in the Preamble of the Note Purchase
Agreement.
"Escrow and Paying Agent Agreement" has the meaning set forth in the fifth
recital to the Note Purchase Agreement.
"FAA" means the Federal Aviation Administration of the United States.
"Final Withdrawal" with respect to each Escrow and Paying Agent Agreement, has
the meaning set forth in Section 1.02 thereof.
"Financing Agreements" means, collectively, the Lease Financing Agreements and
the Owner Financing Agreements.
"FNBM" has the meaning set forth in the Preamble of the Note Purchase Agreement.
"Funding Date" has the meaning specified in Section 1(b)(ii).
"Government Entity" means (a) any federal, state, provincial or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency or other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative or regulatory
functions of such government or (b) any other government entity having
jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"H.15(519)" means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System.
"Indentures" means, collectively, the Leased Aircraft Indentures and the Owned
Aircraft Indentures.
A-3
"Initial Purchasers" has the meaning set forth in the fourth recital to the Note
Purchase Agreement.
"Intercreditor Agreement" has the meaning set forth in the ninth recital to the
Note Purchase Agreement.
"Issuance Date" means the date of the original issuance of the Certificates.
"Law" means (a) any constitution, treaty, statute, law, decree, regulation,
order, rule or directive of any Government Entity, and (b) any judicial or
administrative interpretation or application of, or decision under, any of the
foregoing.
"Lease" means a Lease Agreement substantially in the form of Exhibit A-2 to the
Note Purchase Agreement.
"Lease Financing Agreements" means, collectively, the Aircraft Purchase
Agreement Assignment, the Leased Aircraft Participation Agreement, the Lease,
the Leased Aircraft Indenture, the Equipment Notes issued thereunder and the
Trust Agreement relating to the financing of a Leased Aircraft.
"Leased Aircraft" means a New Aircraft subject to a Lease.
"Leased Aircraft Indenture" means a Trust Indenture and Security Agreement
substantially in the form of Exhibit A-3 to the Note Purchase Agreement.
"Leased Aircraft Participation Agreement" means a Participation Agreement
substantially in the form of Exhibit A-1 to the Note Purchase Agreement.
"Liquidity Facility" has the meaning set forth in the ninth recital to the Note
Purchase Agreement.
"Liquidity Provider" has the meaning set forth in the ninth recital to the Note
Purchase Agreement.
"Loan Trustee" means (i) in the case of the Lease Financing Agreements, the
"Indenture Trustee" as defined therein and (ii) in the case of the Owner
Financing Agreements, the "Indenture Trustee" as defined therein.
"Mandatory Document Terms" means the terms set forth on Schedule V to the Note
Purchase Agreement.
"Mandatory Economic Terms" means the terms set forth on Schedule VI to the Note
Purchase Agreement.
"Manufacturer" means Bombardier Inc, a Canadian company, solely in its capacity
as manufacturer or seller of New Aircraft.
A-4
"New Aircraft" has the meaning set forth in the second recital to the Note
Purchase Agreement.
"Note Purchase Agreement" means the Note Purchase Agreement to which this Annex
A is attached.
"Notice of Purchase Withdrawal" with respect to each Deposit Agreement, has the
meaning set forth in Section 2.3 thereof.
"Offering Memorandum" means the Offering Memorandum dated August 6, 1998 of
Midway relating to the Certificates.
"Operative Agreements" means, collectively, the Pass Through Trust Agreements,
the Escrow and Paying Agent Agreements, the Deposit Agreements, the Liquidity
Facilities, the Intercreditor Agreement, the Trust Agreements, the Equipment
Notes, the Certificates and the Financing Agreements.
"Owned Aircraft" means a New Aircraft subject to an Owned Aircraft Indenture.
"Owned Aircraft Indenture" means a Trust Indenture and Mortgage substantially in
the form of Exhibit C-2 to the Note Purchase Agreement.
"Owned Aircraft Participation Agreement" means a Participation Agreement
substantially in the form of Exhibit C-1 to the Note Purchase Agreement.
"Owner Financing Agreements" means, collectively, the Owned Aircraft
Participation Agreement, the Owned Aircraft Indenture and the Equipment Notes
issued thereunder.
"Owner Participant" means, with respect to any Leased Aircraft, the Person named
as the Owner Participant in the Participation Agreement with respect to such
Leased Aircraft.
"Owner Trust" means with respect to any Leased Aircraft, the trust created by
the "Trust Agreement" referred to in the Leased Aircraft Indenture related
thereto.
"Owner Trustee" means with respect to any Leased Aircraft, the "Owner Trustee"
party to the "Trust Agreement" referred to in the Leased Aircraft Indenture
related thereto.
"Participation Agreements" means, collectively, the Leased Aircraft
Participation Agreements and the Owned Aircraft Participation Agreements.
"Pass Through Trusts" has the meaning set forth in the third recital to the Note
Purchase Agreement.
A-5
"Pass Through Trust Agreements" means each of the four separate Pass Through
Trust Agreements, each dated as of the Issuance Date, by and between the Company
and Pass Through Trustee.
"Pass Through Trustee" has the meaning set forth in the Preamble of the Note
Purchase Agreement.
"Paying Agent" has the meaning set forth in the first Preamble of the Note
Purchase Agreement.
"Person" means any individual, firm, partnership, joint venture, trust, trustee,
Government Entity, organization, association, corporation, government agency,
committee, department, authority and other body, corporate or incorporate,
whether having distinct legal status or not, or any member of any of the same.
"Pro Rata Share" means, with respect to any Class of Certificates, if any
Aircraft has not been delivered by the Manufacturer on or prior to the Delivery
Period Termination Date due to any reason not occasioned by the Company's fault
or negligence, an amount equal to the maximum principal amount of Equipment
Notes with respect to such Aircraft that could have been issued and acquired by
the Pass Through Trust that issued such Class of Certificates in accordance with
the Mandatory Economic Terms.
"Qualified Owner Participant" means any bank, trust company, insurance company,
financial institution or corporation (other than, without the Company's consent,
a commercial air carrier, a commercial aircraft operator, a freight forwarder or
Affiliate of any of the foregoing), in each case with a combined capital and
surplus or net worth of at least $50,000,000.
"Rating Agencies" means, collectively, at any time, each nationally recognized
rating agency which shall have been requested to rate the Certificates and which
shall then be rating the Certificates. The initial Rating Agencies will be
Xxxxx'x Investors Service, Inc. and Standard & Poor's Ratings Services, a
division of XxXxxx-Xxxx Inc.
"Rating Agency Confirmation" means, with respect to any Financing Agreement that
has been modified in any material respect from the forms thereof attached to the
Note Purchase Agreement, a written confirmation from each of the Rating Agencies
that the use of such Financing Agreement with such modifications would not
result in (i) a reduction of the rating for any Class of Certificates below the
then current rating for such Class of Certificates or (ii) a withdrawal or
suspension of the rating of any Class of Certificates.
"Register" means the register maintained pursuant to Sections 3.04 and 7.12 of
the Pass Through Trust Agreements.
"Regular Distribution Dates" shall mean January 2 and July 2 of each year,
commencing January 2, 1999.
A-6
"Remaining Weighted Average Life" means, on a given date with respect to any
Equipment Note, the number of days equal to the quotient obtained by dividing
(a) the sum of each of the products obtained by multiplying (i) the amount of
each then remaining scheduled payment of principal of such Equipment Note by
(ii) the number of days from and including such determination date to but
excluding the date on which such payment of principal is scheduled to be made,
by (b) the then outstanding principal amount of such Equipment Note.
"Section 1110" means 11 U.S.C. ss. 1110 of the Bankruptcy Code or any successor
or analogous Section of the federal bankruptcy Law in effect from time to time.
"Series A Equipment Notes" means Equipment Notes issued under an Indenture and
designated as "Series A" thereunder.
"Series B Equipment Notes" means Equipment Notes issued under an Indenture and
designated as "Series B" thereunder.
"Series C Equipment Notes" means Equipment Notes issued under an Indenture and
designated as "Series C" thereunder.
"Series D Equipment Notes" means Equipment Notes issued under an Indenture and
designated as "Series D" thereunder.
"Subordination Agent" has the meaning set forth in the Preamble of the Note
Purchase Agreement.
"Taxes" means all license, recording, documentary, registration and other
similar fees and all taxes, levies, imposts, duties, charges, assessments or
withholdings of any nature whatsoever imposed by any Taxing Authority, together
with any penalties, additions to tax, fines or interest thereon or additions
thereto.
"Taxing Authority" means any federal, state or local government or other taxing
authority in the United States, any foreign government or any political
subdivision or taxing authority thereof, any international taxing authority or
any territory or possession of the United States or any taxing authority
thereof.
"Treasury Yield" means, as of any date of determination, with respect to any
Equipment Note (utilizing the Assumed Amortization Schedule applicable thereto),
the interest rate (expressed as a decimal and, in the case of United States
Treasury bills, converted to a bond equivalent yield) determined to be the per
annum rate equal to the semi-annual yield to maturity for United States Treasury
securities maturing on the Average Life Date (of such Equipment Note) and
trading in the public securities markets either as determined by interpolation
between the most recent weekly average yield to maturity for two series of
United States Treasury securities, trading in the public securities markets, (A)
one maturing as close as possible to, but earlier than, the Average Life Date
(of such Equipment Note) and (B) the other turning as close as possible to, but
A-7
later than, the Average Life Date (of such Equipment Note), in each case as
published in the most recent H.15(519) or, if a weekly average yield to maturity
for United States Treasury securities maturing on the Average Life Date (of such
Equipment Note) is reported on the most recent H.15(519), such weekly average
yield to maturity as published in such H.15(519).
"Triggering Event" has the meaning assigned to such term in the Intercreditor
Agreement.
"Trust Agreement" means a Trust Agreement substantially in the form of Exhibit
A-5 to the Note Purchase Agreement.
A-8
================================================================================
PARTICIPATION AGREEMENT [N ___]
Dated as of __________ __, 199_
among
MIDWAY AIRLINES CORPORATION,
Lessee
---------------------------
as Owner Participant,
FIRST UNION TRUST COMPANY NATIONAL ASSOCIATION,
not in its individual capacity (except as otherwise
expressly set forth herein) but solely as,
Owner Trustee
THE FIRST NATIONAL BANK OF MARYLAND,
Indenture Trustee
THE FIRST NATIONAL BANK OF MARYLAND,
Pass-Through Trustee
and
THE FIRST NATIONAL BANK OF MARYLAND
Subordination Agent
================================================================================
COVERING ONE CANADAIR REGIONAL JET SERIES 200ER
AIRCRAFT BEARING U.S. REGISTRATION NO. N___
TABLE OF CONTENTS
PAGE
----
ARTICLE 1. INTERPRETATION.................................................... 2
Section 1.01. Definitions........................................ 2
Section 1.02. References......................................... 2
Section 1.03. Headings........................................... 2
Section 1.04. Appendices Schedules and Exhibits.................. 2
ARTICLE 2. SALE, LEASING AND SECURED LOAN TRANSACTIONS....................... 2
Section 2.01. Participation...................................... 2
(a) Sale and Purchase.................................. 2
(b) Leasing............................................ 3
(c) Owner Participant's Equity Investment.............. 3
(d) Secured Loan....................................... 3
(e) Delivery Date...................................... 3
Section 2.02. Closing Procedure.................................. 4
(a) Time and Place..................................... 4
(b) Actions of the Owner Trustee....................... 4
(c) Actions of the Lessee.............................. 4
ARTICLE 3. CONDITIONS PRECEDENT.............................................. 5
Section 3.01. Conditions Precedent to Obligations of
Participants....................................... 5
(a) Notice............................................. 5
(b) Delivery of Documents.............................. 5
(c) Airworthiness...................................... 8
(d) Other Commitments.................................. 9
(e) Violation of Law................................... 9
(f) Tax Law Change..................................... 9
(g) No Event of Default................................ 9
(h) No Event of Loss................................... 9
(i) Title.............................................. 9
(j) Certification...................................... 9
(k) Section 1110....................................... 9
(l) Filings............................................ 9
(m) Financing Statements............................... 10
(n) Precautionary Financing Statements................. 10
(o) No Proceedings..................................... 10
(p) Governmental Action................................ 10
(q) Note Purchase Agreement............................ 10
(r) Perfected Security Interest........................ 10
Section 3.02. Conditions Precedent to Obligations of
Lessee............................................. 10
-i-
(a) Documents.......................................... 11
(b) Other Conditions Precedent......................... 11
(c) Tax Law Change..................................... 11
Section 3.03. Post-Registration Opinion.......................... 11
ARTICLE 4. LESSEE'S REPRESENTATIONS, WARRANTIES AND
COVENANTS......................................................... 11
Section 4.01. Lessee's Representations and Warranties............ 11
Section 4.02. Certain Covenants of Lessee........................ 14
(a) Filings and Recordings............................. 14
(b) Registration....................................... 14
(c) Information........................................ 16
(d) Corporate Existence................................ 16
(e) Merger and Consolidation........................... 16
(f) Change of Location................................. 17
(g) Financial Statements............................... 18
(h) Notice of Sublease................................. 19
Section 4.03. Survival of Representations and Warranties......... 19
ARTICLE 5. OTHER PARTIES' REPRESENTATIONS, WARRANTIES
AND COVENANTS..................................................... 19
Section 5.01. Representations, Warranties and Covenants
of Owner Participant............................... 19
(a) Representations and Warranties..................... 19
(b) Lessor's Liens..................................... 20
(c) Assignment of Interests of Owner
Participant........................................ 21
(d) Actions with Respect to Lessor's Estate, Etc....... 22
(e) Citizenship........................................ 22
Section 5.02. Citizenship........................................ 23
(a) Generally.......................................... 23
(b) Owner Trustee...................................... 23
Section 5.03. Representations, Warranties and Covenants
of Trust Company and the Owner Trustee............. 23
(a) Representations and Warranties..................... 23
(b) Lessor's Liens..................................... 25
(c) Indemnity for Lessor's Liens....................... 25
(d) Securities Act..................................... 26
(e) Actions With Respect to Lessor's Estate, Etc....... 26
Section 5.04. Representations, Warranties and Covenants
of the Indenture Trustee........................... 26
(a) Representations and Warranties..................... 26
(b) Indenture Trustee's Liens.......................... 27
(c) Indemnity for Indenture Trustee's Liens............ 27
-ii-
Section 5.05. Indenture Trustee's Notice of Default
Trustee's Notice of Default........................ 27
Section 5.06. Releases from Indenture............................ 27
Section 5.07. The Lessee's Right of Quiet Enjoyment.............. 28
Section 5.08. Pass-Through Trustee's Representations and
Warranties......................................... 28
Section 5.09. Survival of Representations, Warranties and
Covenants.......................................... 29
Section 5.10. Lessee's Assumption of the Equipment
Notes.............................................. 29
Section 5.11. Compliance with Trust Agreement, Etc............... 31
Section 5.12. Subordination Agent's Representations,
Warranties and Covenants........................... 32
(a) Representations and Warranties..................... 32
(b) Covenants.......................................... 33
Section 5.13. Amendments to the Indenture........................ 34
ARTICLE 6. TAXES............................................................. 34
Section 6.01. Lessee's Obligation to Pay Taxes................... 34
(a) Generally.......................................... 34
(b) Exceptions......................................... 35
(c) Withholding........................................ 38
Section 6.02. After-Tax Basis.................................... 38
Section 6.03. Time of Payment.................................... 39
Section 6.04. Contests........................................... 39
Section 6.05. Refunds............................................ 41
Section 6.06. Reports............................................ 42
Section 6.07. Survival of Obligations............................ 43
Section 6.08. Payment of Taxes................................... 43
Section 6.09. Reimbursements by Indemnities Generally............ 43
Section 6.10. Forms.............................................. 43
Section 6.11. Verification....................................... 43
Section 6.12. Non-Parties........................................ 44
ARTICLE 7. GENERAL INDEMNITY ................................................ 44
Section 7.01. Generally.......................................... 44
(a) Indemnity.......................................... 44
(b) Exceptions......................................... 45
Section 7.02. Notice and Payment................................. 46
Section 7.03. Defense of Claims.................................. 47
Section 7.04. Insured Claims..................................... 47
Section 7.05. Subrogation........................................ 48
Section 7.06. Survival of Obligations............................ 48
Section 7.07. Effect of Other Indemnities........................ 48
-iii-
Section 7.08. Waiver of Certain Claims........................... 48
Section 7.09. Certain Limitations................................ 48
ARTICLE 8. TRANSACTION COSTS................................................. 49
Section 8.01. Transaction Costs and Other Costs.................. 49
(a) Transaction Costs.................................. 49
(b) Continuing Expenses................................ 49
(c) Amendments and Supplements......................... 49
ARTICLE 9. SUCCESSOR OWNER TRUSTEE .......................................... 50
Section 9.01. Appointment of Successor Owner Trustee............. 50
(a) Resignation and Removal............................ 50
(b) Conditions to Appointment.......................... 50
ARTICLE 10.LIABILITIES AND INTERESTS OF THE OWNER
PARTICIPANT AND HOLDERS........................................... 51
Section 10.01. Liabilities of the Owner Participant............... 51
Section 10.02. Interest of Holders of Equipment Notes............. 51
ARTICLE 11.OTHER DOCUMENTS................................................... 52
Section 11.01. Consent of Lessee to Other Documents............... 52
Section 11.02. Pass-Through Trustee's and Subordination
Agent's Acknowledgment............................. 52
ARTICLE 12.NOTICES........................................................... 52
Section 12.01. Notices............................................ 52
ARTICLE 13.REFINANCING....................................................... 53
Section 13.01. Refinancing........................................ 53
ARTICLE 14.[RESERVED]........................................................ 56
ARTICLE 15.MISCELLANEOUS .................................................... 56
Section 15.01. Counterparts....................................... 56
Section 15.02. No Oral Modifications.............................. 56
Section 15.03. Captions........................................... 56
Section 15.04. Successors and Assigns............................. 56
Section 15.05. Concerning the Owner Trustee, Indenture
Trustee and the Pass-Through Trustee............... 57
Section 15.06. Severability....................................... 57
Section 15.07. Certain Limitations on Reorganization.............. 57
Section 15.08. GOVERNING LAW...................................... 58
Section 15.09. Section 1110 Compliance............................ 58
Section 15.10. Reliance of Liquidity Providers.................... 58
-iv-
Schedule I Commitments
Appendix A Definitions
Exhibit A-1(a) Form of Opinion of General Counsel of Lessee
Exhibit A-1(b) Form of Opinion of Special North Carolina counsel
Exhibit A-2 Form of Opinion of Fulbright & Xxxxxxxx L.L.P.
Exhibit A-3 Form of Opinion of Ober, Kaler, Xxxxxx & Xxxxxxx, as
special counsel to Indenture Trustee, Subordination
Agent and Pass-Through Trustee
Exhibit A-4 Form of Opinion of Morris, James, Hitchens & Xxxxxxxx,
as special counsel to the Owner Trustee
Exhibit A-5 Form of Opinion of Xxxxx & Xxxxxxx P.C.
Exhibit B Form of Assignment and Assumption Agreement
-v-
PARTICIPATION AGREEMENT [N____] dated as of __________, 199_ (this
"Agreement") among MIDWAY AIRLINES CORPORATION, a Delaware corporation (herein,
together with its successors and permitted assigns, the "Lessee"), FIRST UNION
TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as otherwise expressly stated herein, but solely as
owner trustee under the Trust Agreement referred to below (in such capacity as
trustee, together with its successors and permitted assigns, the "Owner
Trustee"), ____________________, a _____________________ (together with its
successors and permitted assigns, the "Owner Participant", THE FIRST NATIONAL
BANK OF MARYLAND, a national banking association, as indenture trustee under the
Indenture referred to below (together with its successors and permitted assigns,
the "Indenture Trustee"), THE FIRST NATIONAL BANK OF MARYLAND, a national
banking association, as pass-through trustee of four separate Pass-Through
Trusts (together with its successors and permitted assigns, the "Pass-Through
Trustee"), and THE FIRST NATIONAL BANK OF MARYLAND, a national banking
association, as subordination agent (together with its successors and permitted
assigns, the "Subordination Agent").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article 1 hereof.
WHEREAS, pursuant to the Purchase Agreement the Manufacturer agreed
to manufacture and sell to the Lessee and the Lessee agreed to purchase from the
Manufacturer the Aircraft; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant and First Union Trust Company, National
Association, are entering into the Trust Agreement whereby, among other things,
First Union Trust Company, National Association, is appointed as Owner Trustee
and has undertaken to acquire and hold the Trust Estate in trust for the benefit
of the Owner Participant; and
WHEREAS, subject to the terms and conditions of this Agreement, the
Lessee has assigned to the Owner Trustee, pursuant to the Purchase Agreement
Assignment, the Lessee's right to take title to the Aircraft from the
Manufacturer and the Owner Trustee is willing to purchase the Aircraft from the
Manufacturer for immediate lease to the Lessee pursuant to the Lease; and
WHEREAS, subject to the terms and conditions of this Agreement and
the Trust Agreement, the Owner Participant is willing to make the equity
investment provided for herein to fund such purchase by the Owner Trustee; and
WHEREAS, the Owner Trustee and the Indenture Trustee are
concurrently entering into the Indenture for the benefit of the holders of the
Equipment Notes, pursuant to which Indenture the Owner Trustee shall, subject to
the terms and conditions set forth therein, issue to the Pass-Through Trustee
under each of the Pass-Through Trust Agreements, as a Loan Participant,
Equipment Notes substantially in the form set forth in the Indenture as evidence
of the loan to be made by each such Loan Participant to the Owner Trustee to
finance a portion of Lessor's Cost for the Aircraft, all as more particularly
described herein and in the Indenture;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration and receipt and adequacy of
which is hereby acknowledged, and intending to be legally bound, the parties do
hereby agree as follows:
ARTICLE 1.
INTERPRETATION
Section 1.01. Definitions. Capitalized terms used herein and defined
in Appendix A shall, except as such definitions may be specifically modified in
the body of this Agreement for the purposes of a particular section, paragraph
or clause, have the meanings given such terms in Appendix A.
Section 1.02. References. References in this Agreement to sections,
paragraphs, clauses, appendices, schedules and exhibits are to sections,
paragraphs, clauses, appendices, schedules and exhibits in and to this Agreement
unless otherwise specified.
Section 1.03. Headings. The headings of the various sections,
paragraphs and clauses of this Agreement and the table of contents are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof.
Section 1.04. Appendices Schedules and Exhibits. The appendices,
schedules and exhibits are part of this Agreement.
ARTICLE 2.
SALE, LEASING AND SECURED LOAN TRANSACTIONS
Section 2.01. Participation. Subject to all of the terms and
conditions of this Agreement, the parties agree to participate in the sale,
leasing and secured loan transactions with respect to the Aircraft provided for
in this Section 2.
(a) Sale and Purchase. The Lessee agrees to assign, pursuant to the
Purchase Agreement Assignment, to the Owner Trustee the right to take title to
the Aircraft from the Manufacturer under the Purchase Agreement and the Owner
Trustee agrees to purchase from the Manufacturer, the Aircraft on the Delivery
Date for a purchase price equal to Lessor's Cost.
-2-
(b) Leasing. The Owner Trustee agrees to lease to the Lessee, and
the Lessee agrees to lease from the Owner Trustee, the Aircraft pursuant to the
Lease, such leasing to take place concurrently with the purchase of the Aircraft
by the Owner Trustee on the Delivery Date.
(c) Owner Participant's Equity Investment. The Owner Participant
agrees to provide immediately available funds in the amount determined by
multiplying Lessor's Cost by the percentage set forth opposite its name on
Schedule I (the Owner Participant's "Commitment") by paying such amount to the
Owner Trustee by 11:00 a.m. New York City local time on the Delivery Date at the
account specified by the Lessee on or prior to the Delivery Date, such amount to
be held and applied toward the Owner Trustee's payment to the Lessee of Lessor's
Cost for the Aircraft on the Delivery Date (and if not so applied, to be
promptly returned to the Owner Participant). Such funds, once so applied, shall
constitute an equity investment by the Owner Participant in the Trust Estate.
(d) Secured Loan. Each Loan Participant agrees to provide
immediately available funds in the amount determined by multiplying Lessor's
Cost by the percentage set forth opposite its name on Schedule I (each such
commitment being referred to as a Loan Participant's "Commitment") to or on
behalf of the Owner Trustee by paying or causing to be paid such amount to the
Owner Trustee, at the account specified by the Lessee on or prior to the
Delivery Date such amount to be held and applied toward the Owner Trustee's
payment to the Lessee of Lessor's Cost for the Aircraft on the Delivery Date
(and if not so applied, to be promptly returned to the Loan Participants). Such
funds, once so applied, shall constitute a loan to the Owner Trustee to be
evidenced by the Equipment Notes and secured as provided in the Indenture.
(e) Delivery Date. The "Delivery Date" shall be the date fixed by
the Lessee in accordance with this Section 2(e) for the closing of the sale,
leasing and loan transactions with respect to the Aircraft contemplated hereby,
except that following such closing the "Delivery Date" shall mean the date on
which such transactions actually closed. The Lessee shall give at least two
Business Days' notice to each other party hereto of the Delivery Date, which
notice shall also specify the amount of the Owner Participant's Commitment and
each Loan Participant's Commitment. The Lessee may postpone a scheduled Delivery
Date from time to time, for any reason by notice given to the other parties
hereto not later than 3:00 p.m. on the date last scheduled as the Delivery Date,
such notice to specify a new Delivery Date. In the event that a Participant
shall have provided the amount of its Commitment to the Owner Trustee prior to
such a postponement, the Owner Trustee shall promptly return such amount to such
Participant unless such Participant shall have agreed otherwise in writing. The
making available by the Owner Participant of its Commitments at the closing
shall be deemed a waiver of notice of the Delivery Date by the Owner Participant
and the Owner Trustee, and the making available by the Loan Participants of
their Commitment at the closing shall be deemed a waiver of notice of the
Delivery Date by such Loan Participants respectively and the Indenture Trustee.
-3-
Section 2.02. Closing Procedure.
(a) Time and Place. The closing shall take place at 11:00 a.m. New
York City local time on the Delivery Date at the offices of Fulbright & Xxxxxxxx
L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx or at such other time and place as
the parties may agree. The closing shall be preceded by a pre-closing at the
same place, the time for which shall be fixed by the Lessee, at which the forms
of the Operative Agreements to be executed, the certificates and other documents
to be delivered and the forms of the legal opinions to be delivered at the
closing by each party or its counsel pursuant to this Agreement shall be
available for inspection by the parties and their respective counsel.
(b) Actions of the Owner Trustee. Upon receipt in full by the Owner
Trustee (or tender by a Participant to the Lessee on behalf of the Owner
Trustee) of the Commitment of each Participant together with instructions (which
may be oral) from each Participant or its special counsel that the applicable
conditions precedent set forth in Section 3.01 have been satisfied or waived by
such Participant, the Owner Trustee on the Delivery Date shall purchase the
Aircraft from the Manufacturer, lease the Aircraft to the Lessee, issue the
Equipment Notes to the Pass-Through Trustee and make a security assignment of
all of its right, title and interest in and to the Trust Indenture Estate to the
Indenture Trustee. To accomplish such transactions, the Owner Trustee shall,
concurrently with the actions of the Lessee pursuant to Section 2.02(c), take
the following actions: (i) pay or cause to be paid an amount equal to Lessor's
Cost to the Lessee (or at the direction of the Lessee, to the Manufacturer) for
the purchase of the Aircraft by transferring such amount in immediately
available funds to the account specified by the Lessee on or prior to the
Delivery Date; (ii) authorize its representative or representatives, who shall
be a person or persons designated by the Lessee and acceptable to the Owner
Trustee, to accept delivery of the Aircraft pursuant to this Agreement; (iii)
accept the Bills of Sale for the Aircraft; (iv) execute, and cause to be
authenticated and delivered to each Loan Participant with respect to each
Pass-Through Trust Agreement, the Equipment Notes specified, by reference to
principal amounts, maturity dates and interest rates, in the Indenture; (v)
execute and deliver the Lease, the Lease Supplement, the Indenture and the
Indenture Supplement; (vi) deliver the Aircraft to the Lessee pursuant to the
Lease; and (vii) execute and deliver all other documents or certificates and
take such other actions as may be required of the Owner Trustee on or before the
Delivery Date pursuant to any Operative Agreement. In addition, the Owner
Trustee shall take such actions as may be requested by the Lessee to effect the
due registration of the Aircraft with the FAA in the name of the Owner Trustee
and to file and perfect the security interest of the Loan Trustee in all or any
part of the Indenture Estate.
(c) Actions of the Lessee. Upon satisfaction or waiver by the Lessee
of the conditions precedent set forth in Section 3.02, the Lessee shall on the
Delivery Date assign to the Owner Trustee pursuant to the Purchase Agreement
Assignment the Lessee's right to take title to the Aircraft and lease the
Aircraft from the Owner Trustee pursuant to the Lease. To accomplish such
transactions the Lessee shall,
-4-
concurrently with the actions of the Owner Trustee pursuant to Section 2.02(b),
take the following actions:
(i) execute and deliver the Lease and the Lease Supplement;
(ii) authorize its representative or representatives (who shall be
the same person or persons designated by the Lessee for purposes of clause
(ii) of Section 2.02(b)), to accept delivery of the Aircraft from the
Owner Trustee pursuant to the Lease; and
(iii) execute and deliver all other documents or certificates and
take such other actions as may be required of the Lessee on or before the
Delivery Date pursuant to any Operative Agreement.
ARTICLE 3.
CONDITIONS PRECEDENT
Section 3.01. Conditions Precedent to Obligations of Participants.
The obligation of each Participant to make the Dollar amount of its respective
Commitment available for payment as directed by the Owner Trustee on the
Delivery Date is subject to satisfaction or waiver by each such Participant, on
or prior to the Delivery Date, of the conditions precedent set forth below in
this Section 3.01; provided, that it shall not be a condition precedent to the
obligation of any Participant that any document be produced or action taken that
is to be produced or taken by such Participant or by a Person within such
Participant's control; provided, further, that Sections 3.01(b)(iii), (xii) and
(xviii)(H) shall not be conditions precedent to the obligation of Loan
Participant and Sections 3.01(q) and 3.01(r) shall not be conditions precedent
to the obligation of Owner Participant:
(a) Notice. Such Participant shall have received the notice of the
Delivery Date as provided in Section 2(e), or shall have waived such notice.
(b) Delivery of Documents. Such Participant shall, except as noted
below, have received executed counterparts of the following agreements,
instruments, certificates or documents, and such counterparts (a) shall have
been duly authorized, executed and delivered by the respective party or parties
thereto, (b) shall be reasonably satisfactory in form and substance to such
Participant and (c) shall be in full force and effect:
(i) the Lease; provided that, only the Indenture Trustee shall
receive the sole executed chattel paper original thereof;
(ii) Lease Supplement No. 1; provided that, only the Indenture
Trustee shall receive the sole executed chattel paper original thereof;
-5-
(iii) the Tax Indemnity Agreement; provided that, only Owner
Participant and Lessee shall receive copies of the Tax Indemnity
Agreement;
(iv) the Trust Agreement;
(v) the Indenture;
(vi) Indenture Supplement No. 1;
(vii) the Purchase Agreement Assignment and the Engine Warranty
Assignment;
(viii) the Consent and Agreement and the Engine Consent and
Agreement;
(ix) the Equipment Notes dated the Delivery Date; provided that,
only the Subordination Agent shall receive the authenticated Equipment
Notes;
(x) the Bills of Sale;
(xi) the broker's report and insurance certificates required by
Section 11 of the Lease;
(xii) an appraisal or appraisals from an Appraiser, which appraisal
or appraisals shall be satisfactory in form and substance to Owner
Participant; provided, that only Owner Participant and Lessee shall
receive copies of such appraisal or appraisals;
(xiii) (A) a copy of the Certificate of Incorporation and By-Laws of
Lessee and resolutions of the board of directors of Lessee and/or the
executive committee thereof, in each case certified as of the Delivery
Date, by the Secretary or an Assistant Secretary of Lessee, duly
authorizing the execution, delivery and performance by Lessee of the
Operative Agreements required to be executed and delivered by Lessee on or
prior to the Delivery Date in accordance with the provisions hereof and
thereof; (B) an incumbency certificate of Lessee, Owner Participant, FNBM
and Trust Company as to the person or persons authorized to execute and
deliver the relevant Operative Agreements on behalf of such party; and (C)
a copy of the Certificate of Incorporation or Articles of Incorporation
and By-Laws and general authorizing resolutions of the boards of directors
(or executive committees) or other satisfactory evidence of authorization
of Owner Participant, FNBM and Trust Company, certified as of the Delivery
Date by the Secretary or an Assistant or Assistant Secretary of Owner
Participant, FNBM and Trust Company, respectively,
-6-
which authorize the execution, delivery and performance by Owner
Participant, FNBM and Trust Company, respectively, of each of the
Operative Agreements to which it is a party, together with such other
documents and evidence with respect to it as Lessee or any Participant may
reasonably request in order to establish the consummation of the
transactions contemplated by this Agreement and the taking of all
corporate proceedings in connection therewith;
(xiv) an Officer's Certificate of Lessee, dated as of the Delivery
Date, stating that its representations and warranties set forth in this
Agreement are true and correct as of the Delivery Date (or, to the extent
that any such representation and warranty expressly relates to an earlier
date, true and correct as of such earlier date);
(xv) an Officer's Certificate of Trust Company, dated as of the
Delivery Date, stating that its representations and warranties, in its
individual capacity and as Owner Trustee, set forth in this Agreement are
true and correct as of the Delivery Date (or, to the extent that any such
representation and warranty expressly relates to an earlier date, true and
correct as of such earlier date);
(xvi) an Officer's Certificate of Owner Participant, dated as of the
Delivery Date, stating that its representations and warranties set forth
in this Agreement are true and correct as of the Delivery Date (or, to the
extent that any such representation and warranty expressly relates to an
earlier date, true and correct as of such earlier date);
(xvii) an Officer's Certificate of FNBM, dated as of the Delivery
Date, stating that its representations and warranties, in its individual
capacity or as Indenture Trustee, a Pass-Through Trustee or Subordination
Agent, as the case may be, set forth in the Agreement are true and correct
as of the Delivery Date (or, to the extent that any such representation
and warranty expressly relates to an earlier date, true and correct as of
such earlier date);
(xviii) the following opinions of counsel, in each case dated the
Delivery Date:
(A) (I) Xxxxxxxx Xxxxxx, Senior Vice President and General
Counsel of the Lessee substantially in the form of Exhibit A-1(a) hereto
and (II) Xxxxxxx Xxxxxxxxx, Xxxxxxx & Xxxxxxx, special North Carolina
counsel to the Lessee, substantially in the form of Exhibit A-1(b) hereto,
in each case addressed to the Owner Participant, the Owner Trustee, the
Pass-Through Trustee, each Liquidity Provider and the Indenture Trustee.
-7-
(B) Fulbright & Xxxxxxxx, L.L.P. special counsel for the
Lessee substantially in the form of Exhibit A-2 hereto addressed to the
Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass-Through Trustee, each Liquidity Provider and the Lessee;
(C) Morris, James, Hitchens & Xxxxxxxx, special counsel for
the Owner Trustee substantially in the form of Exhibit A-3 hereto
addressed to the Owner Participant, the Indenture Trustee, the Owner
Trustee, the Pass-Through Trustee, each Liquidity Provider and the Lessee;
(D) Ober, Kaler, Xxxxxx & Xxxxxxx, special counsel for the
Indenture Trustee, Pass-Through Trustee and Subordination Agent in the
form of Exhibit A-4 hereto and addressed to the Indenture Trustee, the
Owner Participant, the Owner Trustee, the Pass-Through Trustee, each
Liquidity Provider and the Lessee;
(E) Xxxxx & Xxxxxxx P.C., special aviation counsel,
substantially in the form of Exhibit A-5 hereto and addressed to the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass-Through
Trustee, each Liquidity Provider and the Lessee;
(F) special counsel for the Manufacturer, in a form reasonably
acceptable to the Owner Participant and addressed to the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass-Through
Trustee, each Liquidity Provider and the Lessee;
(G) counsel for the Engine Manufacturer, in a form reasonably
acceptable to the Owner Participant and addressed to the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass-through
Trustee, each Liquidity Provider and the Lessee;
(H) in the case of the Owner Participant only, tax counsel to
the Owner Participant, addressed to the Owner Participant, with respect to
tax matters; and
(I) special counsel for the Owner Participant and the Owner
Participant Guarantor, if any, and the General Counsel's Office of the
Owner Participant and the Owner Participant, if any, in each case in
customary form, addressed to the Indenture Trustee, the Owner Trustee, the
Pass-Through Trustee, each Liquidity Provider and the Lessee.
(c) Airworthiness. Each Participant shall receive a copy of a
current, valid Standard Certificate of Airworthiness for the Aircraft duly
issued by the FAA.
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(d) Other Commitments. Each other Participant shall have made
available the Dollar amount of its Commitment as directed by Owner Trustee in
accordance with Section 2.01(c) or 2.01(d), as the case may be.
(e) Violation of Law. No change shall have occurred after the date
of this Agreement in any Applicable Law that makes it a violation of Law for (a)
Lessee, any Participant, Subordination Agent, Owner Trustee or the Indenture
Trustee to execute, deliver and perform the Operative Agreements to which any of
them is a party or (b) any Participant to make the Dollar amount of its
Commitment available or, in the case of any Loan Participant, to acquire an
Equipment Note or to realize the benefits of the security afforded by the
Indenture.
(f) Tax Law Change. In the case of the Owner Participant, there
shall not have occurred since _____________________ any Change in Tax Law which,
in the reasonable opinion of the Owner Participant, renders it disadvantageous
or inadvisable for the Owner Participant to consummate the transactions
contemplated hereby, including, without limitation, its judgment that the
assumed tax benefits set forth in Section 1 of the Tax Indemnity are rendered
doubtful or invalid.
(g) No Event of Default. On the Delivery Date, no event shall have
occurred and be continuing, or would result from the sale, mortgage or lease of
the Aircraft, which constitutes a Default, Event of Default, Indenture Default
or Indenture Event of Default.
(h) No Event of Loss. No Event of Loss with respect to the Airframe
or any Engine shall have occurred and no circumstance, condition, act or even
that, with the giving of notice or lapse of time or both, would give rise to or
constitute an Event of Loss with respect to the Airframe or any Engine shall
have occurred.
(i) Title. Owner Trustee shall have good title (subject to filing
and recordation of the FAA Xxxx of Sale with the FAA) to the Aircraft, free and
clear of Liens, except Permitted Liens.
(j) Certification. The Aircraft shall have been duly certificated by
the FAA as to type and airworthiness as required by the terms of the Lease.
(k) Section 1110. Owner Trustee, as lessor under the Lease (and
Indenture Trustee, as assignee of Owner Trustee under the Indenture), shall be
entitled to the benefits of Section 1110 (as currently in effect) with respect
to the right to take possession of the Airframe and Engines as provided in the
Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which
Lessee is a debtor.
(l) Filings. On the Delivery Date (i) application for registration
of the Aircraft in the name of the Owner Trustee shall have been duly made with
the FAA in compliance with the provisions of the Transportation Code; and (ii)
the Indenture, Indenture Supplement No. 1, the Lease, Lease Supplement No. 1 and
the FAA Xxxx of
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Sale shall have been duly filed for recordation (or shall be in the process of
being so duly filed for recordation) with the FAA in accordance with the
Transportation Code.
(m) Financing Statements. A Uniform Commercial Code financing
statement or statements covering the security interest contemplated by the
Indenture shall have been executed and delivered by the Owner Trustee as debtor
and by the Indenture Trustee as secured party, and such financing statement or
statements shall have been duly filed in all places necessary or desirable
within the State of Delaware.
(n) Precautionary Financing Statements. A Uniform Commercial Code
"precautionary" financing statement or statements describing the Lease as a
lease but covering any security interest in favor of the Owner Trustee (and the
Loan Trustee as assignee of the Owner Trustee) which may be created thereby,
shall have been executed and delivered by the Lessee and the Owner Trustee
(naming the Owner Trustee as Lessor and secured party and Loan Trustee as
assignee), and shall have been duly filed in all places necessary or desirable
within the State of North Carolina.
(o) No Proceedings. No action or proceeding shall have been
instituted, nor shall any action be threatened in writing, before any
governmental authority, nor shall any order, judgment or decree have been issued
or proposed to be issued by any Governmental authority, to set aside, restrain,
enjoin or prevent the completion and consummation of this Agreement or any other
Operative Agreement or the transactions contemplated hereby or thereby.
(p) Governmental Action. All appropriate action required to have
been taken prior to the Delivery Date by the FAA, or any governmental or
political agency, subdivision or instrumentality of the United States, in
connection with the transactions contemplated by this Agreement shall have been
taken, and all orders, permits, waivers, authorizations, exemptions and
approvals of such entities required to be in effect on the Delivery Date in
connection with the transactions contemplated by this Agreement shall have been
issued.
(q) Note Purchase Agreement. The conditions precedent to the
obligations of the Loan Participants and the other requirements relating to the
Aircraft and the Equipment Notes set forth in the Note Purchase Agreement shall
have been satisfied.
(r) Perfected Security Interest. On the Delivery Date, after giving
effect to the filing of the documents referenced in Section 3.01(l)(ii) and the
financing statements referenced in Sections 3.01(m) and (n), the Indenture
Trustee shall have received a duly perfected first priority security interest in
all of Owner Trustee's right, title and interest in the Aircraft and the Lease,
subject only to Permitted Liens.
Section 3.02. Conditions Precedent to Obligations of Lessee. The
obligation of Lessee to lease the Aircraft on the Delivery Date is subject to
the
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satisfaction or waiver by Lessee, on or prior to the Delivery Date, of the
conditions precedent set forth below in this Section 3.02.
(a) Documents. Executed originals of the agreements, instruments,
certificates, documents and opinions described in Section 3.01(b) shall have
been received by Lessee, except as specifically provided therein, and shall be
satisfactory to Lessee, unless the failure to receive any such agreement,
instrument, certificate or document is the result of any action or inaction by
Lessee.
(b) Other Conditions Precedent. Each of the conditions set forth in
Sections 3.01(c), (d) (as to all Participants), (e), (g) (as to Indenture
Defaults and Indenture Events of Default not arising from Defaults or Events of
Default, as the case may be), (h), (i), (j), (k), (l), (m), (n) and (o) shall
have been satisfied or waived by Lessee, unless the failure of any such
condition to be satisfied is the result of any action or inaction by Lessee.
(c) Tax Law Change. There shall not have occurred any Change in Tax
Law since _________ which, in the reasonable opinion of the Lessee, renders it
disadvantageous or inadvisable for the Lessee to consummate the transactions
contemplated hereby, including, without limitation, its judgment that there will
be an increased risk that it may be required to indemnify the Owner Participant
under the Tax Indemnity Agreement.
Section 3.03. Post-Registration Opinion. Promptly upon the
registration of the Aircraft and the recordation of the Documents referenced in
Section 3.01(l)(ii), Lessee will direct Xxxxx & Xxxxxxx P.C., special counsel in
Oklahoma City, Oklahoma, to deliver to Lessee, each Participant, Owner Trustee
and the Indenture Trustee a favorable opinion or opinions addressed to each of
them with respect to such registration and recordation.
ARTICLE 4.
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 4.01. Lessee's Representations and Warranties. The Lessee
represents and warrants that, as of the Delivery Date (unless any such
representation and warranty is specifically made as of an earlier date, in which
case the Lessee represents and warrants as of such earlier date):
(a) the Lessee is a corporation duly organized and validly existing
and is in good standing under the laws of Delaware, has its principal place of
business and chief executive office (as such terms are used in Article 9 of the
Uniform Commercial Code) in Durham, North Carolina, and is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the failure to be so qualified or in good standing would have a materially
adverse effect on its business or would impair its ability to perform its
obligations under the Lessee Documents;
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(b) the Lessee has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its properties and to enter into and perform its obligations under the
Lessee Documents;
(c) the Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Section 41102(a) of the
Transportation Code and a "citizen of the United States" within the meaning of
Section 40102(a)(15) of the Transportation Code holding an "air carrier
operating certificate" issued under Chapter 447 of the Transportation Code for
aircraft capable of carrying ten or more individuals or 6,000 pounds or more of
cargo, and each such certificate is in full force and effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively "permits")
which are necessary to the operation of the routes flown by it and the conduct
of its business and operations as currently conducted and each such permit is in
full force and effect, except for any such permits the failure to have or
maintain which would not have a material adverse effect on the Lessee or its
ability to perform its obligations under the Lessee Documents;
(e) the execution, delivery and performance of the Lessee Documents
by the Lessee have been duly authorized by all necessary corporate action on the
part of the Lessee and do not require any stockholder approval, or approval or
consent of any trustee or holder of any indebtedness or obligations of the
Lessee, and each such Lessee Documents has been duly executed and delivered and
constitutes the legal, valid and binding obligations of the Lessee enforceable
against it in accordance with the terms thereof except as such enforceability
may be limited by bankruptcy, insolvency, or other similar laws or by general
equitable principles;
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state governmental
authority or regulatory body is required for the execution, delivery or
performance by the Lessee of the Lessee Documents except for such registrations,
applications and recordings referred to in the opinion of Xxxxx and Xxxxxxx P.C.
delivered pursuant to Sections 3.01(b)(xviii)(E) and the filings referred to in
Section 3.01(l)(ii);
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a breach
or violation of any of the terms, conditions or provisions of, or will require
any consent (other than the PAA Consent and the Engine Manufacturer's Consent)
or approval under, any law, governmental rule or regulation or the charter
documents, as amended, or bylaws, as amended, of the Lessee or any order, writ,
injunction or decree of any court or governmental authority against the Lessee
or by which it or any of its properties is bound or any indenture, mortgage or
contract or other agreement or instrument to which the Lessee is a party or by
which it or any of its properties is bound, or
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constitutes or will constitute a default thereunder or results or will result in
the imposition of any Lien upon any of its properties (other than Permitted
Liens), except for any such conflict, breach or default which would not have a
material adverse effect on the Lessee or its ability to perform its obligations
under the Lessee Documents;
(h) except as disclosed in the Offering Memo, there are no pending
or, to the knowledge of the Lessee, threatened actions, suits, investigations or
proceedings against or affecting the Lessee or any of its properties before or
by any court or administrative agency which, (A) may reasonably be expected to
have a materially adverse effect on the Lessee's consolidated financial
condition, business, or operations, or (B) would materially adversely affect the
ability of the Lessee to consummate the transactions contemplated by the
Operative Agreements or perform its obligations under the Lessee Documents;
(i) [Reserved].
(j) except for (A) the registration in the Owner Trustee's name of
the Aircraft pursuant to the Transportation Code, (B) the filing with and, where
appropriate, recordation by the FAA pursuant to the Transportation Code of the
Indenture (including Indenture Supplement No. 1), and the Lease (including Lease
Supplement No. 1), (C) the filing of the financing statements referred to in
Sections 3.01(m) and 3.01(n) and (D) the taking of possession by the Indenture
Trustee of the original counterpart of the Lease (including Lease Supplement No.
1), no further action, including any filing or recording of any document, is
necessary or advisable in order (i) to establish the Owner Trustee's title to
and interest in the Aircraft and the Lessor's Estate as against the Lessee and
any third parties, or (ii) to perfect the first security interest in and Lien on
the Trust Indenture Estate in favor of the Indenture Trustee;
(k) the Owner Trustee has received good and marketable title to the
Aircraft, free and clear of all Liens, except Permitted Liens;
(l) assuming the truth of the representations contained in Section
3.12 of the Pass-Through Trust Agreements and compliance with Section 10.06 of
the Indenture, the execution and delivery of this Agreement and the other
Operative Agreements and the consummation of the transactions contemplated
hereby and thereby will not involve any prohibited transaction within the
meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through (D) of the
Code;
(m) all premiums which have become due with respect to the insurance
required to be provided by the Lessee on or prior to the Delivery Date under
Section 9 of the Lease have been paid by the Lessee;
(n) no Default exists and no Event of Loss, or event which with the
passage of time would constitute an Event of Loss, exists;
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(o) the Aircraft is in such condition so as to enable the
airworthiness certificate of such Aircraft to be in good standing under the
Transportation Code; the Aircraft has been duly certificated by the FAA as to
type and airworthiness; there is in effect with respect to the Aircraft a
current and valid airworthiness certificate issued by the FAA pursuant to the
Transportation Code;
(p) the Lessee shall not be in default (after any applicable grace
periods) in the performance of any material term or condition of the Purchase
Agreement;
(q) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company" within
the meaning of the Investment Company Act of 1940, as amended;
(r) there are no broker's or underwriter's fees payable on behalf of
the Lessee in connection with the transactions contemplated in the Operative
Agreements, other than those of the Placement Agents and the Lessee Advisor
referred to in Article 8 hereof; and
(s) the Lessee represents and warrants that it has authorized no one
to act on its behalf in connection with the offer or sale of any interest in the
Certificates or the Pass-Through Certificates other than the Placement Agents.
Section 4.02. Certain Covenants of Lessee. The Lessee covenants and
agrees as follows:
(a) Filings and Recordings. The Lessee will cause to be done,
executed, acknowledged and delivered at the Lessee's cost and expense all such
further acts, conveyances and assurances as the Owner Trustee, the Indenture
Trustee, the Pass-Through Trustee or the Owner Participant shall reasonably
require for accomplishing the purposes of the Operative Agreements. Without
limiting the generality of this Section 4.02(a), the Lessee will promptly take,
or cause to be taken, at the Lessee's cost and expense, such action with respect
to the recording, filing, re-recording and re-filing of the Indenture (including
each supplement thereto), the Lease (including each supplement thereto), and any
financing statements or other instruments as may be reasonably requested by the
Indenture Trustee and appropriate, to maintain the perfection of the first
security interest and the Lien created by the Indenture, and the Owner Trustee's
title to and interest in the Aircraft and the Lessor's Estate, as against the
Lessee and any third parties, or if the Lessee cannot take, or cause to be
taken, such action, will furnish to the Indenture Trustee and the Owner Trustee
timely notice of the necessity of such action, together with such instruments,
in execution form, and such other information as may be required to enable
either of them to take such action at the Lessee's cost and expense in a timely
manner.
(b) Registration. From and after the Delivery Date, the Lessee shall
cause the Aircraft to be duly registered, and at all times to remain duly
registered, in
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the name of the Owner Trustee (provided, that the Owner Trustee and the Owner
Participant shall be and remain Citizens of the United States), under the
Transportation Code, and shall furnish to the Owner Trustee such information as
may be required to enable the Owner Trustee to make application for such
registration; provided, however, that the Lessee may, at any time cause the
Aircraft to be appropriately re-registered under the laws of a country with
which at the time of such registration the United States maintains normal
diplomatic relations and is listed on Exhibit E to the Lease; provided that:
(i) at the time of re-registration, no Specified Default exists or
would occur as a result of such re-registration;
(ii) the Lessee shall pay all fees and expenses (including the
reasonable fees and expenses of local counsel in such country) relating to
such reregistration;
(iii) the Lessee shall, at its cost, cause the interest of the Owner
Trustee as owner of the Aircraft and the Indenture Trustee as mortgagee
thereof to be duly registered or recorded under the laws of such country
and at all times thereafter to remain so duly registered or recorded
unless and until the registration of the Aircraft is changed as provided
herein, and shall cause to be done at all times all other acts including
the filing, recording and delivery of any document or instrument and the
payment of any sum necessary or, by reference to prudent industry practice
in such country, advisable in order to create, preserve and protect such
interest in the Aircraft (including the first priority duly perfected Lien
under the Indenture) as against the Lessee or any third parties in such
jurisdiction, and the laws of such country would give effect to the Owner
Trustee's title to the Aircraft and the Indenture Trustee's Lien thereon;
(iv) the obligations of the Lessee and each other party under the
Operative Agreements (and of the Permitted Sublessee, if any, under a
Sublease) shall remain or be, as the case may be, legal, valid, binding
and enforceable in such country;
(v) The Lessee shall ensure that all insurance provided for herein
shall be in full force and effect prior to, at the time of, and after such
change in registration and the Owner Participant, the Owner Trustee, and
the Indenture Trustee shall receive a certificate of Lessee's insurance
broker to such effect;
(vi) the country of such re-registration imposes aircraft
maintenance standards approved by, or at least as stringent as those
approved by, the FAA or the central civil aviation authority of the United
Kingdom, France, Germany, Japan, the Netherlands or Canada;
(vii) it shall not be necessary by reason of such re-registration or
for purposes of enforcing remedies contained in the Lease or the Indenture
or the
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related Sublease for the Owner Trustee, the Indenture Trustee or the Owner
Participant to register or qualify to do business in such country;
(viii) no Liens (except Permitted Liens) shall arise by reason of
such reregistration, and the Indenture shall continue as a first priority
Lien on the collateral thereunder;
(ix) none of the Owner Trustee, the Indenture Trustee and the Owner
Participant shall be subjected to any adverse tax consequences for which
the Lessee is not required to and does not then indemnify such Person in a
manner reasonably satisfactory to such Person as a result of such
re-registration;
(x) any export licenses and certificate of deregistration required
in connection with any repossession or return of the Aircraft will be
readily obtainable in the normal course without material delay or material
burden on the Owner Trustee or the Indenture Trustee, it being agreed that
the Lessee shall be responsible for the cost thereof; and
(xi) the Owner Participant, the Owner Trustee, and the Indenture
Trustee shall have received opinions in scope, form and substance
reasonably satisfactory to them, of counsel, expert in the laws of such
country, to the effect set forth in clauses (iii), (iv) (with respect to
the obligations of the Lessee under the Lease), (vii) and (x).
Lessee agrees to pay on an After-Tax Basis all reasonable out-of-pocket costs
and expenses (including, without limitation, reasonable counsel fees and
disbursements) of the Owner Participant, the Owner Trustee, and the Indenture
Trustee in connection with any re-registration pursuant to this Section.
(c) Information. The Lessee shall promptly furnish to the Owner
Trustee and the Owner Participant such information as may be required to enable
the Owner Trustee and the Owner Participant timely to file any reports required
to be filed by the Owner Trustee as the Lessor and the Owner Participant under
the Lease with any governmental authority as a result of the Owner Trustee's
ownership interest in the Aircraft.
(d) Corporate Existence. The Lessee shall at all times maintain its
corporate existence except as permitted by Section 4.02(e) hereof and all of its
rights, privileges and franchises necessary in the normal conduct of its
business, except for any corporate right, privilege or franchise that it
determines, is no longer necessary or desirable in the conduct of its business.
(e) Merger and Consolidation. The Lessee shall not, during the Term,
enter into any merger with or into or consolidation with, or sell, convey,
transfer, lease or otherwise dispose of in one or a series of transactions all
or substantially all of its assets as an entirety to any Person, unless the
surviving corporation or Person which
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acquires by purchase, conveyance, transfer or lease all or substantially all of
the assets of the Lessee as an entirety (i) is a domestic corporation organized
and existing under the laws of the United States or any State of the United
States (ii) is a Citizen of the United States, (iii) is a Section 1110 Person,
so long as such status is a condition to the availability of Section 1110 of the
Bankruptcy Code, (iv) if not the Lessee, executes a duly authorized, legal,
valid, binding, and enforceable agreement, reasonably satisfactory in form and
substance to Owner Trustee and Owner Participant, containing an effective
assumption of all of the Lessee's, as applicable, obligations hereunder and
under the other Operative Agreements, and each other document contemplated
hereby or thereby and delivers such instrument to the Indenture Trustee, the
Owner Participant and the Owner Trustee, (v) provides an opinion from counsel
(which counsel may be in the Lessee's General Counsel) delivered to the Owner
Trustee, the Indenture Trustee and the Owner Participant, which opinion shall be
reasonably satisfactory to the Owner Participant and the Indenture Trustee, and
an officer's certificate (which may rely, as to legal matters, on such legal
opinion), each stating that such merger, consolidation, conveyance, transfer,
lease or other disposition and the instrument noted in clause (iv) above comply
with this Section 4.02(e), that such instrument is a legal, valid and binding
obligation of, and is enforceable against, such survivor or Person, and that all
conditions precedent herein provided for relating to such transaction have been
complied with, and (vi) such survivor or Person makes such filings and
recordings with the FAA as may be required pursuant to part A of subtitle VII or
Xxxxx 00, Xxxxxx Xxxxxx Code to evidence such merger or consolidation; provided
that, no such merger, consolidation or conveyance, transfer or lease shall be
permitted if, immediately after giving effect to such consolidation, merger,
purchase, conveyance, transfer, lease or other disposition, an Event of Default
shall have occurred and be continuing.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 4.02(e), the successor
corporation formed by such consolidation or into which the Lessee is merged or
the Person to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Lessee
under this Agreement and the Lease and each other Operative Agreement and any
other document contemplated hereby and thereby to which the Lessee is a party
with the same effect as if such successor corporation had been named as the
Lessee herein and therein. No such conveyance, transfer or lease of all or
substantially all of the assets of the Lessee as an entirety shall have the
effect of releasing the Lessee or any successor corporation which shall
theretofore have become the Lessee hereunder in the manner prescribed in this
Section 4.02(e) from its liability hereunder or under the other Operative
Agreements. Nothing contained herein shall permit any lease, sublease, or other
arrangement for the use, operation or possession of the Aircraft except in
compliance with the applicable provisions of the Lease.
(f) Change of Location. The Lessee agrees to give prompt written
notice to the Owner Participant, the Owner Trustee and the Indenture Trustee of
any
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change in the address of its chief executive office (as such term is used in
Section 9-103(3) of the North Carolina Uniform Commercial Code) or of any change
in its corporate name; provided that, notice is hereby given that the Lessee
plans to so change such address on or about January 1, 1999 to: 0000 Xxxxxx
Xxxx, Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000;
(g) Financial Statements. The Lessee agrees to furnish to the Owner
Participant during the Term:
(i) within 60 days after the end of each of the first three fiscal
quarters in each fiscal year of the Lessee, unaudited consolidated balance
sheets of the Lessee and its subsidiaries (if any) as of the end of such
quarter and related consolidated statements of income, shareholder's
equity and cash flows of the Lessee and its subsidiaries (if any) for the
period commencing at the end of the previous fiscal year and ending with
the end of such quarter, provided that so long as the Lessee is subject to
the reporting provisions of the Securities Exchange Act of 1934, a copy of
the Lessee's quarterly report on Form 10-Q will satisfy this requirement;
(ii) within 120 days after the end of each fiscal year of the
Lessee, a copy of the annual report for such year for the Lessee or the
affiliated group of which the Lessee is a member (on a consolidated basis,
if applicable) and a balance sheet of the Lessee and its subsidiaries (if
any) as of the end of such fiscal year and related statements of income,
shareholder's equity and cash flows of the Lessee for such fiscal year, in
comparative form with the preceding fiscal year, in each case certified by
independent certified public accountants of national standing as having
been prepared in accordance with generally accepted accounting principles
in the United States, provided that so long as the Lessee is subject to
the reporting provisions of the Securities Exchange Act of 1934, a copy of
the Lessee's annual report on Form 10-K will satisfy this requirement;
(iii) within 120 days after the end of each fiscal year of the
Lessee, an Officer's Certificate of the Lessee, to the effect that the
signer is familiar with or has reviewed the relevant terms of the Lease
and has made, or caused to be made under his supervision, a review of the
transactions and conditions of the Lessee during the preceding fiscal year
and that such review has not disclosed the existence during such period,
nor does the signer have knowledge of the existence as of the date of such
certificate, of any condition or event which constituted or constitutes a
Default or Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what
action the Lessee has taken or is taking or proposes to take with respect
thereof; and
(iv) from time to time, such other non-confidential financial
information as the Lessor the Owner Participant may reasonably request.
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(h) Notice of Sublease. In the event that the Lessee subleases the
Aircraft pursuant to Section 5(b)(x) of the Lease, it shall give notice of such
sublease to each of (i) Xxxxx'x Investor Service, 00 Xxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Corporate Rating Division (facsimile no.: (212)
533-1607) and (ii) Standard and Poor's Rating Agency, 00 Xxxxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (facsimile no. (000) 000-0000).
Section 4.03. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Section 4.01 and in any
other Operative Agreement shall survive the delivery of the Aircraft and the
expiration or other termination of this Agreement and the other Operative
Agreements.
ARTICLE 5.
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.01. Representations, Warranties and Covenants of Owner
Participant.
(a) Representations and Warranties. The Owner Participant represents
and warrants that:
(i) it is a corporation duly incorporated and validly existing
in good standing under the laws of the State of __________ and it has full
corporate power, authority and legal right to carry on its present
business and operations, to own or lease its properties and to enter into
and to carry out the transactions contemplated by this Agreement and the
other Operative Agreements to which it is party;
(ii) the execution, delivery and performance by it of this
Agreement and the other Operative Agreements to which it is party have
been duly authorized by all necessary corporate action on its part and, do
not require any governmental approvals that would be required to be
obtained by the Owner Participant;
(iii) neither the execution, delivery or performance by the
Owner Participant of the Operative Agreements to which it is party, nor
compliance with the terms and provisions hereof or thereof, conflicts or
will conflict with or results or will result in a breach or violation of
any of the terms, conditions or provisions of, or will require any consent
or approval under any law, governmental rule or regulation applicable to
the Owner Participant or the charter documents, as amended, or bylaws, as
amended, of the Owner Participant or any order, writ, injunction or decree
of any court or governmental authority against the Owner Participant or by
which it or any of its properties is bound or any indenture, mortgage or
contract or other agreement or instrument to which the Owner Participant
is a party or by which it or any of
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its properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any Lien upon
any of its properties, except for any such conflict, breach or default
which would not have a material adverse effect on the Owner Participant or
its ability to perform its obligations under the Operative Agreements;
(iv) the Operative Agreements to which it is party have been
duly executed and delivered by the Owner Participant and constitute the
legal, valid and binding obligations of the Owner Participant enforceable
against it in accordance with their terms except as such enforceability
may be limited by bankruptcy, insolvency, or other similar laws or general
equitable principles;
(v) there are no pending or, to the knowledge of the Owner
Participant, threatened actions, suits, investigations or proceedings
against the Owner Participant before any court, administrative agency or
tribunal which are expected to materially adversely affect the ability of
the Owner Participant to perform its obligations under this Agreement and
the other Operative Agreements to which it is or is to be a party and the
Owner Participant knows of no pending or threatened actions or proceedings
before any court, administrative agency or tribunal involving it in
connection with the transactions contemplated by the Operative Agreements;
and
(vi) neither the execution and delivery by it of this
Agreement or the other Operative Agreements to which it is a party nor the
performance of obligations hereunder or thereunder requires the consent or
approval of or the giving of notice to, the registration with, or the
taking of any other action in respect of, any governmental authority or
agency that would be required to be obtained or taken by the Owner
Participant except for filings contemplated by this Agreement.
Notwithstanding the foregoing or anything else contained in
this Agreement, the Owner Participant makes no representation or warranty in
this Agreement with respect to laws, rules or regulations relating to aviation
or to the nature or use of the equipment owned by the Owner Trustee, including,
without limitation, the airworthiness, value, condition, workmanship, design,
patent or trademark infringement, operation, merchantability or fitness for use
of the Aircraft, other than such laws, rules or regulations relating to the
citizenship requirements of the Owner Participant under applicable aviation law.
(b) Lessor's Liens. The Owner Participant represents, warrants and
covenants that on the Delivery Date there are no Lessor's Liens attributable to
it (or an Affiliate thereof). The Owner Participant agrees with and for the
benefit of the Lessee, the Owner Trustee, the Indenture Trustee and the
Pass-Through Trustee that the Owner Participant will, at its own cost and
expense, take such action as may be necessary to duly discharge and satisfy in
full, promptly after the same first becomes known to the Owner Participant, any
Lessor's Lien attributable to the Owner
-20-
Participant (or an Affiliate thereof), provided, however, that the Owner
Participant shall not be required to discharge or satisfy such Lessor's Lien
which is being contested by the Owner Participant in good faith and by
appropriate proceedings so long as such proceedings do not involve any material
risk of the sale, forfeiture or loss of the Aircraft or the Lessor's Estate or
the Trust Indenture Estate or any interest in any thereof or otherwise
materially adversely affect the validity or priority of the Lien of the
Indenture.
(c) Assignment of Interests of Owner Participant. At any time after
the Delivery Date and subject to satisfaction of the conditions set forth in
this Section 5.01(c), the Owner Participant may assign, convey or otherwise
transfer to a single institutional investor or an Affiliate of an institutional
investor all (but not less than all) of the Beneficial Interest, provided that
(i) the Owner Participant gives the Lessee and the Indenture Trustee at least 10
days' days' notice of such assignment, conveyance or other transfer, (ii) the
Owner Participant and any Owner Participant Guarantor shall remain liable for
all obligations of the Owner Participant under the Trust Agreement and the
Operative Agreements to which the Owner Participant is a party to the extent
(but only to the extent) relating to the period on or before the date of such
transfer, and (iii) the transferee agrees by a written instrument substantially
in the form attached hereto as Exhibit B to assume liability for, and undertake
performance of, all obligations of the Owner Participant under the Trust
Agreement and the other Operative Agreements to which such Owner Participant is
a party relating to the period after the date of transfer. Any such transferee
shall (a) be (i) a bank, savings institution, finance company, leasing company
or trust company, national banking association acting for its own account or in
a fiduciary capacity as trustee or agent under any pension, retirement, profit
sharing or similar trust or fund, insurance company, fraternal benefit society
or corporation acting for its own account having a combined capital and surplus
(or, if applicable, consolidated net worth or its equivalent) of not less than
$50,000,000, (ii) a subsidiary of any Person described in clause (i) where such
Person provides (A) support for the obligations assumed by such transferee
subsidiary reasonably satisfactory to the Lessee, the Owner Trustee and the
Indenture Trustee or (B) an unconditional guaranty of such transferee
subsidiary's obligations, or (iii) an Affiliate of the transferring Owner
Participant, so long as such Affiliate has a combined capital and surplus (or,
if applicable, consolidated net worth or its equivalent) of not less than
$50,000,000 (unless the Owner Participant remains liable for the obligations of
such Affiliate under the Operative Agreements, in which case there shall be such
net worth requirement), (b) be legally capable of binding itself to the
obligations of the Owner Participant and shall expressly agree to assume all
obligations of the Owner Participant under the Trust Agreement and this
Agreement and (c) provide representations, warranties, and covenants
substantially similar to those contained in clauses (a), (c) and (f) of this
Section 5.01; provided that, without the prior written consent of the Lessee,
such transferee shall not be an airline or other aircraft operator or competitor
of the Lessee or an Affiliate of any thereof; and provided further that neither
such transferee nor any Affiliate thereof shall (x) be a party to any litigation
or arbitration (whether as plaintiff or defendant) with the Lessee or any
Affiliate of the Lessee or (y) be attempting a hostile takeover of the Lessee or
any
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Affiliate of the Lessee. A transferee hereunder shall be a Citizen of the United
States or has established a voting trust, voting powers or other arrangement
reasonably satisfactory to the Indenture Trustee, the Owner Trustee, and the
Lessee to permit the Owner Trustee to be the registered owner of the Aircraft
under the Transportation Code, without in any way restricting the Lessee's use
and operation of the Aircraft. The Owner Trustee shall not be on notice of or
otherwise bound by any such assignment, conveyance or transfer unless and until
it shall have received an executed counterpart of the instrument of such
assignment, conveyance or transfer. Upon any such disposition by the Owner
Participant to a transferee as above provided, the transferee shall be deemed
the "Owner Participant" for all purposes of the Operative Agreements, and shall
be deemed to have acquired the same interest in the Lessor's Estate as
theretofore held by its transferor; and each reference therein to the "Owner
Participant" shall thereafter be deemed a reference to such transferee. No
assignment, conveyance or transfer by the Owner Participant of the Beneficial
Interest shall increase the amount of the liability of the Lessee under Article
6 hereof or under the Tax Indemnity Agreement over the amount of liability the
Lessee would have incurred had such assignment, conveyance or transfer not
occurred. The Owner Participant shall pay all costs (including the Lessee's
costs) in connection with any such assignment, conveyance or transfer.
(d) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
(e) Citizenship. The Owner Participant agrees, solely for the
benefit of the Lessee, the Pass-Through Trustee, the Indenture Trustee and the
Owner Trustee, that if at any time on or after the Delivery Date when the
Aircraft is registered or the Lessee proposes to register the Aircraft in the
United States (i) either the Owner Participant shall cease to be, or an event
which has been publicly disclosed has occurred of which the Owner Participant
has knowledge and which will cause the Owner Participant to cease to be, a
Citizen of the United States, and (ii) the Aircraft shall or would therefore
become ineligible for registration in the name of the Owner Trustee under the
Transportation Code and regulations then applicable thereunder (such eligibility
to be determined without regard to any provision of law that permits the U.S.
registration of the Aircraft by restricting where it is based or used), then the
Owner Participant shall give notice thereof to the Lessee, the Owner Trustee and
the Indenture Trustee and shall (at its own expense and without any
reimbursement or indemnification from the Lessee) immediately (and in any event
within a period of 20 days) promptly effect (x) effect a voting trust or other
similar arrangement, (y) transfer in accordance with the terms of this Agreement
and the Trust Agreement all its rights, title and interest in and to such Trust
Agreement, the Lessor's Estate and this Agreement, or (z) take any other
alternative action that would prevent any deregistration, or maintain or permit
the United States registration, of the Aircraft (determined without regard to
any provision of law that permits the U.S. registration
-22-
of the Aircraft by restricting where it is based or used). Each party hereto
agrees, upon the request and at the sole expense of the Owner Participant, to
cooperate with the Owner Participant in complying with its obligations under the
provisions of the first sentence of this Section 5.01(e), but without any
obligation on the part of such other party to take any action believed by it in
good faith to be unreasonably burdensome to such party or materially adverse to
its business interests.
Section 5.02. Citizenship.
(a) Generally. The Owner Trustee, in its individual capacity,
represents and warrants that it is and on the Delivery Date will be a Citizen of
the United States. If the Owner Trustee in its individual capacity does not
comply with the requirements of this Section 5.02, the Owner Trustee and the
Indenture Trustee hereby agree that no Default shall be deemed to exist due to
non-compliance by the Lessee with the registration requirements in the Lease or
in Section 4.02(b) hereof occasioned by such noncompliance of the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time on or after the Delivery Date any of its
Responsible Officers shall have actual knowledge that it has ceased to be a
Citizen of the United States, it will resign immediately as the Owner Trustee if
such citizenship is necessary for registration of the Aircraft in the Owner
Trustee's name under the Transportation Code as in effect at such time (such
necessity to be determined without regard to any provision of law that permits
the U.S. registration of the Aircraft by restricting where it is based or used)
or, if it is not necessary for such registration, if the Owner Trustee is
informed in writing by the Lessee, the Indenture Trustee or any Owner
Participant that such lack of United States citizenship would have any adverse
effect on the Lessee, the Indenture Trustee, the Holders or any Owner
Participant. The Owner Trustee, in its individual capacity, further covenants
that if at any time it appears reasonably probable that it will cease to be a
Citizen of the United States based on information that is (i) known to a
Responsible Officer of the Owner Trustee or (ii) generally known to the public,
it will promptly so notify, to the extent permitted by law, all parties to this
Agreement.
Section 5.03. Representations, Warranties and Covenants of Trust
Company and the Owner Trustee.
(a) Representations and Warranties. In addition to and without
limiting its other representations and warranties provided for in this Article
5, Trust Company represents and warrants, in its individual capacity with
respect to items (i), (ii), (iii)(A), (iv), (v), (vi), (vii), (viii) and (ix)
below, and as the Owner Trustee with respect to items (iii)(B) and (iv), on the
Delivery Date that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States with its
principal place of business and chief executive office (as such terms are
used in Article 9
-23-
of the Uniform Commercial Code) in Delaware, and has full corporate power
and authority, in its individual capacity or (assuming the Trust Agreement
has been duly authorized, executed and delivered by the Owner Participant)
as the Owner Trustee, as the case may be, to carry on its business as now
conducted, and to execute, deliver and perform this Agreement and the
Operative Agreements to which it is or is to be a party;
(ii) the execution, delivery and performance by Trust Company,
either in its individual capacity or as the Owner Trustee, as the case may
be, of this Agreement and the Operative Agreements to which it is or is to
be party have been duly authorized by all necessary corporate action on
its part, and do not contravene its articles of association or by-laws;
each of this Agreement and the other Operative Agreements to which it is
or is to be a party has been duly authorized, and has been duly executed
and delivered by Trust Company, either in its individual capacity or as
the Owner Trustee, as the case may be, and neither the execution and
delivery thereof nor Trust Company performance of or compliance with any
of the terms and provisions thereof will violate any federal or Delaware
law or regulation governing Trust Company's banking or trust powers,
(iii) (A) assuming due authorization, execution and delivery by each
other party thereto, each of the Operative Agreements to which it is or is
to be party when duly executed and delivered will, to the extent each such
document is entered into by Trust Company in its individual capacity,
constitute the legal, valid and binding obligation of Trust Company in its
individual capacity enforceable against it in such capacity in accordance
with its respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights (regardless of whether enforceability is considered in a
proceeding in equity or at law), and the performance by Trust Company in
its individual capacity of any of its obligations thereunder does not
contravene any lease, regulation or contractual restriction binding on
Trust Company in its individual capacity;
(B) assuming due authorization, execution and delivery by each
other party thereto, each of the Operative Agreements to which it is or is
to be party when duly executed and delivered will, to the extent each such
document is entered into by the Owner Trustee in its trust capacity,
constitute the legal, valid and binding obligation of the Owner Trustee
enforceable against it in such capacity in accordance with its respective
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws or general equitable
principles, and the performance by the Owner Trustee of any of its
obligations thereunder does not contravene any lease, regulation or
contractual restriction binding on the Owner Trustee;
-24-
(iv) there are no pending or, to its knowledge, threatened actions
or proceedings against Trust Company before any court or administrative
agency which would materially adversely affect the ability of Trust
Company, either in its individual capacity or as the Owner Trustee, as the
case may be, to perform its obligations under the Operative Agreements to
which it is or is to be party;
(v) it shall give the Lessee, the Indenture Trustee and the Owner
Participant at least 30 days' prior written notice in the event of any
change in its chief executive office or name;
(vi) neither the execution and delivery by it, either in its
individual capacity or as the Owner Trustee, as the case may be, of any of
the Operative Agreements to which it is or is to be a party, requires on
the part of Trust Company in its individual capacity or any of its
Affiliates the consent or approval of or the giving of notice to, the
registration with, or the taking of any other action in respect of, any
federal or governmental authority or agency governing its banking or trust
powers; and
(vii) the Owner Trustee holds whatever title to the Aircraft as was
conveyed to it by the Seller and the Aircraft is free of Lessor's Liens
attributable to Trust Company in its individual capacity,
(viii) Trust Company is a Citizen of the United States; and
(ix) Trust Company has made of filing with the New York State
Banking Department under Section 131(3) of the New York State Banking Law
with respect to the trust formed by the Trust Agreement.
(b) Lessor's Liens. Trust Company, in its individual capacity,
further represents, warrants and covenants that there are no Lessor's Liens
attributable to it in its individual capacity on the Delivery Date. The Owner
Trustee, in its trust capacity, and at the cost and expense of the Lessee,
covenants that it will in its trust capacity promptly, and in any event within
30 days after the same shall first become known to it, take such action as may
be necessary to discharge duly any Lessor's Liens attributable to it in its
trust capacity. Trust Company, in its individual capacity, covenants and agrees
that it will at its own expense take such action as may be necessary to duly
discharge and satisfy in full, promptly, and in any event within 30 days after
the same shall first become known to it, any Lessor's Liens attributable to it
in its individual capacity which may arise at any time after the date of this
Agreement.
(c) Indemnity for Lessor's Liens. Trust Company, in its individual
capacity, agrees to indemnify and hold harmless the Lessee, the Indenture
Trustee, the Owner Participant and the Pass-Through Trustee and the Owner
Trustee from and against any loss, cost, expense or damage which may be suffered
by the Lessee, the Indenture Trustee, the Owner Participant, the Pass-Through
Trustee or the Owner
-25-
Trustee as a result of the failure of Trust Company to discharge and satisfy any
Lessor's Liens attributable to it in its individual capacity, as described in
Section 5.03(b) hereof.
(d) Securities Act. None of Trust Company, the Owner Trustee or any
Person authorized by either of them to act on its behalf has directly or
indirectly offered or sold or will directly or indirectly offer or sell any
interest in the Lessor's Estate, or in any similar security relating to the
Lessor's Estate, or in any security the offering of which for purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person.
(e) Actions With Respect to Lessor's Estate, Etc. Neither Trust
Company, in its individual capacity, nor the Owner Trustee will take any action
to subject the Lessor's Estate or the trust established by the Trust Agreement,
as debtor, to the reorganization or liquidation provisions of the Bankruptcy
Code or any other applicable bankruptcy or insolvency statute.
Section 5.04. Representations, Warranties and Covenants of the
Indenture Trustee.
(a) Representations and Warranties. The Indenture Trustee in its
individual capacity represents on the Delivery Date as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
and has the power and authority to enter into and perform its obligations
under the Indenture, this Agreement and the other Operative Agreements to
which it is a party and to authenticate the Equipment Notes to be
delivered on the Delivery Date;
(ii) the Indenture and this Agreement and the other Operative
Agreements to which it is or is to be a party, and the authentication of
the Certificates, have been duly authorized by all necessary corporate
action on its part, and neither the execution and delivery thereof nor its
performance of any of the terms and provisions thereof will violate any
federal or Maryland law or regulation relating to its banking or trust
powers or contravene or result in any breach of, or constitute any default
under, its articles of association or by-laws;
(iii) each of the Indenture and this Agreement, and the other
Operative Agreements to which it is a party, has been duly executed and
delivered by it and, assuming that each such agreement is the legal, valid
and binding obligation of each other party thereto, is (or will be, as the
case may be), the legal, valid and binding obligation of the Indenture
Trustee, enforceable against the Indenture Trustee in accordance with its
terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws or
-26-
equitable principles of general application to or affecting the
enforcement of creditors' rights (regardless of whether enforceability is
considered in a proceeding in equity or at law);
(iv) neither the execution and delivery by it of the Indenture and
this Agreement and the other Operative Agreements to which it is or is to
be a party, nor the performance by it of any of the transactions
contemplated hereby or thereby, requires the consent or approval of, the
giving of notice to, the registration with, or the taking of any other
action in respect of, any Federal or state governmental authority or
agency governing its banking and trust powers; and
(v) it has made a filing with the New York State Banking Department
under Section 131(3) of the New York Banking Law in respect of the
performance of its duties relating to the Trust Indenture Estate.
(b) Indenture Trustee's Liens. The Indenture Trustee, in its
individual capacity, represents, warrants and covenants that there are no
Indenture Trustee's Liens. The Indenture Trustee, in its individual capacity,
covenants and agrees that it will at its own expense take such action as may be
necessary to duly discharge and satisfy in full, promptly, and in any event
within 30 days, after the same shall first become known to it, any Indenture
Trustee's Liens.
(c) Indemnity for Indenture Trustee's Liens. The Indenture Trustee,
in its individual capacity, agrees to indemnify and hold harmless the Lessee,
the Owner Participant, the Owner Trustee and the Pass-Through Trustee from and
against any actual out-of-pocket loss, cost, expense or damage which may be
suffered by the Lessee, the Indenture Trustee, the Owner Participant, the Owner
Trustee or the Pass-Through Trustee as a result of the failure of the Indenture
Trustee to discharge and satisfy any Indenture Trustee's Liens attributable to
it in its individual capacity, as described in Section 5.04(b) hereof.
Section 5.05. Indenture Trustee's Notice of Default Trustee's Notice
of Default. The Indenture Trustee agrees to give the Lessee and the Owner
Participant notice of any Default or Event of Default promptly upon a
Responsible Officer of the Indenture Trustee having actual knowledge thereof.
Section 5.06. Releases from Indenture. The Indenture Trustee
covenants and agrees, for the benefit of the Lessee and the Owner Participant,
to execute and deliver the instruments of release from the Lien of the Indenture
which it is required to execute and deliver in accordance with the provisions of
Article XIV of the Indenture, and the Owner Participant agrees, for the benefit
of the Lessee, to cause the Owner Trustee to request the Indenture Trustee to
execute and deliver such instruments of release upon written notice from the
Lessee to make such request.
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Section 5.07. The Lessee's Right of Quiet Enjoyment. Notwithstanding
any other provision of any of the Operative Agreements, each other party to this
Agreement agrees, severally and as to its own actions only, that it will not, so
long as no Event of Default shall have occurred and be continuing, take or cause
to be taken any action contrary to the Lessee's rights under the Lease,
including, without limitation, its rights to possession, use and quiet enjoyment
of the Aircraft during the Term.
Section 5.08. Pass-Through Trustee's Representations and Warranties.
The Pass-Through Trustee, in its individual capacity (except with respect to
clause (iii) below), represents and warrants as of the Delivery Date that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
and has full the power and authority to enter into and perform its
obligations under the Pass-Through Trust Agreements, the Intercreditor
Agreement and this Agreement and to execute and authenticate the
Pass-Through Certificates to be delivered on the Pass-Through Closing
Date;
(ii) the execution, delivery and performance of this Agreement, and
the Pass-Through Trust Agreement and the performance of its obligations
hereunder and thereunder have been fully authorized by all necessary
corporate action on its part, and neither the execution and delivery
thereof nor its performance of any of the terms and provisions thereof
will violate any federal or Maryland law or regulation relating to its
banking or trust powers or contravene or result in any breach of, or
constitute any default under its articles of association, or bylaws or the
provisions of any indenture, mortgage, contract or other agreement to
which it is a party or by which it or its properties may be bound or
affected; and
(iii) each of this Agreement and the Pass-Through Trust Agreement
has been duly executed and delivered by it (in its individual and trust
capacities) and, assuming that each such agreement is the legal, valid and
binding obligation of each other party thereto, is or will be, as the case
may be, the legal, valid and binding obligation of the Pass-Through
Trustee (in its individual and trust capacities), enforceable in
accordance with its respective terms except as limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(iv) there are no Taxes payable by the Pass-Through Trustee imposed
by the State of Maryland or any political subdivision or taxing authority
thereof in connection with the execution, delivery and performance by the
Pass-Through Trustee of this Agreement, any of the Pass-Through Trust
Agreements (other than franchise or other taxes based on or measured by
any fees or compensation received by the Pass-Through Trustee for services
rendered in connection with
-28-
the transactions contemplated by the Pass-Through Trust Agreements), and
there are no Taxes payable by the Pass-Through Trustee imposed by the
State of Maryland or any political subdivision thereof in connection with
the acquisition, possession or ownership by the Pass-Through Trustee of
any of the Certificates other than franchise or other taxes based on or
measured by any fees or compensation received by the Pass-Through Trustee
for services rendered in connection with the transactions contemplated by
the Pass-Through Trust Agreements;
Section 5.09. Survival of Representations, Warranties and Covenants.
Representations, warranties and covenants of the Owner Participant, the Owner
Trustee (in its individual or trust capacity), the Pass-Through Trustee (in its
individual or trust capacity), the Indenture Trustee (in its individual or trust
capacity) and the Subordination Agent (in its individual or trust capacity)
provided for in this Article 5, and their respective obligations under any and
all of them, shall survive the delivery of the Aircraft and the expiration or
other termination of this Agreement and the other Operative Agreements.
Section 5.10. Lessee's Assumption of the Equipment Notes.
(a) Subject to compliance by the Lessee with all of its obligations
under the Operative Agreements, each of the Owner Participant, the Owner
Trustee, the Indenture Trustee, the Pass-Through Trustee and the Lessee
covenants and agrees that if the Lessee elects to purchase the Aircraft pursuant
to the terms of the Operative Agreements, if no Event of Default shall exist,
then, upon compliance with the applicable provisions of the Operative
Agreements, the Owner Trustee will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens attributable to the Owner
Trustee) but subject to the Lien of the Indenture, all of the Owner Trustee's
right, title and interest in and to the Aircraft, and if the Lessee, in
connection with such purchase, elects to assume the obligations of the Owner
Trustee to the Indenture Trustee and the Holders under the Indenture, the
Equipment Notes, and hereunder, the Lessee shall so notify the Indenture Trustee
(such notice to be given at least 30 and not more than 60 days prior to the
effective date of such assumption), and each of the parties shall execute and
deliver appropriate documentation permitting the Lessee to assume such
obligations on the basis of full recourse to the Lessee, maintaining for the
benefit of the Holders the security interest in the Aircraft created by the
Indenture, and upon compliance with the provisions of this Section 5.10
releasing the Owner Participant and the Owner Trustee from all obligations in
respect of the Certificates, the Indenture, this Agreement, and the other
Operative Agreements, except any obligations relating to the period prior to
such assumption and take all such other actions, at the Lessee's expense, as are
reasonably necessary to permit such assumption by the Lessee.
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(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument (A) pursuant
to which the Lessee irrevocably and unconditionally assumes and
undertakes, with full recourse to the Lessee, to pay, satisfy, and
discharge when and as due (at the stated maturity thereof, by acceleration
or otherwise) the principal of, Make-Whole Premium, if any, interest, and
all other sums owing on all Outstanding Certificates (or on the Lessee's
substituted obligations) in accordance with their terms, and punctually to
perform and observe all of the covenants and obligations hereunder and
under the Indenture and the Certificates (as the same may be amended in
connection with such assumption) to be performed or observed by the Owner
Trustee, and (B) which contains amendments to the Indenture, in form and
substance as reasonably satisfactory to the Indenture Trustee, that
incorporate therein such provisions from the Lease (or, if the Lease has
not been entered into, the form of Lease attached hereto as Exhibit A) and
this Agreement as may be appropriate, including, without limitation,
events of default substantially identical in scope and effect to those set
forth in the Lease (or such form, as the case may be) and covenants
substantially identical to the covenants of the Lessee hereunder and under
the Lease (or such form, as the case may be);
(ii) the instrument referred to in paragraph (i) of this Section
5.10(b), any Uniform Commercial Code financing statements relating
thereto, and any other documents which shall be necessary (or reasonably
requested by the Indenture Trustee) to establish the Lessee's title to and
interest in the Aircraft or to reflect the substitution of the Lessee for
the Owner Trustee under the Operative Agreements or to continue the
perfection of the security interests in the Aircraft and the other rights,
property, and interests included in the Trust Indenture Estate for the
benefit of the Holders shall be filed in such form, manner, and places as
are necessary or, in the reasonable opinion of the Indenture Trustee,
advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance report
dated the effective date of such assumption of an independent insurance
broker and certificates of insurance, each in form and substance
satisfactory to the Indenture Trustee, as to the due compliance as of the
effective date of such assumption with the terms of Section 9 of the Lease
(as it relates to the Indenture Trustee) relating to the insurance with
respect to the Aircraft (provided that the required amount of all-risk
hull insurance, subject to the self insurance rights of the Lessee, shall
be in an amount at least equal to the aggregate outstanding amount of the
Equipment Notes plus six months interest);
(iv) the Indenture Trustee shall have received a certificate from
the Lessee that no Specified Default exists as of the effective date of
such assumption; and
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(v) the Indenture Trustee shall have received (A) from counsel for
the Lessee (who may be the Lessee's General Counsel) a legal opinion, in
form and substance as reasonably satisfactory to the Indenture Trustee:
(w) with respect to the compliance of the assumption contemplated hereby
with the terms hereof, (x) with respect to the due authorization,
execution, delivery, validity, and enforceability of the instrument
referred to in paragraph (i) of this Section 7.11(b), (y) with respect to
the continued perfection of the security interest in the Aircraft for the
benefit of the Holders, and (z) with respect to the continued availability
of the benefits of Section 1110 of the Bankruptcy Code to the Indenture
Trustee for the benefit of the Holders with respect to the Aircraft after
giving effect to such assumption (but only to the extent such benefits
would have been available to the Holders prior to such assumption assuming
compliance with the Operative Agreements by the parties thereto), (B) from
counsel to the Indenture Trustee and Lessee's special aviation counsel, a
legal opinion comparable to the respective opinions delivered on the
Delivery Date, as the case may be, with such changes therein as may be
appropriate in light of such assumption, and (C) in the case of each
opinion described in clause (A) or (B) above, covering such additional
matters as the Indenture Trustee shall reasonably request.
(c) The Lessee shall pay all reasonable expenses (including
reasonable fees and expenses of counsel) of the Indenture Trustee, the Owner
Trustee, the Pass-Through Trustee, each Liquidity Provider and the Owner
Participant in connection with such assumption.
Section 5.11. Compliance with Trust Agreement, Etc. Each of the
Owner Participant, Trust Company, and the Owner Trustee agrees with the Lessee,
the Indenture Trustee, the Liquidity Providers and the Pass-Through Trustee that
so long as the Lien of the Indenture shall be in effect it will (i) comply with
all of the terms of the Trust Agreement applicable to it in its respective
capacity, the noncompliance with which would materially adversely affect any
such party and (ii) not take any action, or cause any action to be taken, to
amend, modify or supplement any other provision of the Trust Agreement in a
manner that would materially adversely affect any such party without the prior
written consent of such party. The Owner Trustee confirms for the benefit of the
Lessee, the Indenture Trustee, the Liquidity Providers and the Pass-Through
Trustee that it will comply with the provisions of Article 2 of the Trust
Agreement. Notwithstanding anything else to the contrary in the Trust Agreement,
so long as the Lease remains in effect, the Owner Participant agrees not to
terminate or revoke the trust created by the Trust Agreement without the consent
of the Lessee. If and so long as the Indenture shall not have been discharged
the consent of the Indenture Trustee shall also be required prior to any
termination or revocation of such trust and in addition, the Owner Trustee will,
at the Lessee's expense, promptly and duly execute and deliver to the Indenture
Trustee such documents and assurances including, without limitation,
conveyances, financing statements and continuation statements with respect to
financing statements and take such further action as the Indenture Trustee may
from time to time reasonably request in order to protect the
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rights and remedies created or intended to be created in favor of the Indenture
Trustee under the Indenture and to create for the benefit of the Certificate
Holders a valid first priority Lien with respect to, and a first and prior
perfected security interest in, the Trust Indenture Estate.
Section 5.12. Subordination Agent's Representations, Warranties and
Covenants.
(a) Representations and Warranties. The Subordination Agent
represents and warrants as of the date hereof (except as otherwise provided),
the Pass-Through Closing Date, the Certificate Closing Date, and the Delivery
Date, that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
and has the corporate power and authority to enter into and perform its
obligations under this Agreement, the Liquidity Facilities and the
Intercreditor Agreement;
(ii) the execution, delivery and performance of this Agreement, each
of the Liquidity Facilities and the Intercreditor Agreement and the
performance of its obligations hereunder and thereunder have been fully
authorized by all necessary, corporate action on its part, and, neither
the execution and delivery thereof nor its performance of any of the terms
and provisions thereof will violate any federal or Maryland law or
regulation relating to its banking or trust powers or contravene or result
in any breach of, or constitute any default under its articles of
association, or bylaws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it or its
properties may be bound or affected;
(iii) each of this Agreement, the Liquidity Facilities and the
Intercreditor Agreement has been duly executed and delivered by it and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Subordination Agent,
enforceable in accordance with its respective terms except as limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) there are no Taxes payable by the Subordination Agent imposed
by the State of Maryland or any political subdivision or taxing authority
thereof in connection with the execution, delivery and performance by the
Subordination Agent of this Agreement, any of the Liquidity Facilities or
the Intercreditor Agreement (other than franchise or other taxes based on
or measured by any fees or compensation received by the Subordination
Agent for services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the Liquidity
Facilities), and there are no Taxes payable by the
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Subordination Agent imposed by the State of Maryland or any political
subdivision thereof in connection with the acquisition, possession or
ownership by the Subordination Agent of any of the Certificates other than
franchise or other taxes based on or measured by any fees or compensation
received by the Subordination Agent for services rendered in connection
with the transactions contemplated by the Intercreditor Agreement or any
of the Liquidity Facilities);
(v) to the best of the Subordination Agent's knowledge, there are no
pending or threatened actions or proceedings against the Subordination
Agent before any court or administrative agency which individually or in
the aggregate, if determined adversely to it, would materially adversely
affect the ability of the Subordination Agent to perform its obligations
under this Agreement, the Intercreditor Agreement or any Liquidity
Facility;
(vi) the Subordination Agent has not directly or indirectly offered
any Certificate for sale to any Person or solicited any offer to acquire
any Certificates from any Person, nor has the Subordination Agent
authorized anyone to act on its behalf to offer directly or indirectly any
Certificate for sale to any Person, or to solicit any offer to acquire any
Certificate from any Person; and the Subordination Agent is not in default
under any Liquidity Facility; and
(vii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter or the Lessee.
(b) Covenants.
(i) The Subordination Agent agrees not to amend any Liquidity
Facility or the Intercreditor Agreement without the consent of the Lessee.
(ii) At any time when directed by the Lessee, the Subordination
Agent shall replace any Liquidity Provider pursuant to Section 3.6(e) of
the Intercreditor Agreement. Except as otherwise expressly provided in the
Intercreditor Agreement, the Subordination Agent shall not in any other
instance replace any Liquidity Provider in respect of any Liquidity
Facility.
(iii) In connection with the deposit in the applicable Cash Account
of amounts drawn pursuant to any Downgrade Drawing or Non-Extension
Drawing (as defined in the Liquidity Facility) under a Liquidity Facility,
the Subordination Agent agrees, so long as no Event of Default shall have
occurred and be continuing, to pay to the Lessee promptly following each
Regular Distribution Date any Investment Earnings on the amount so
deposited which remain after application of such Investment Earnings
pursuant to Section 2.06 of such Liquidity Facility to the interest
payable on such Downgrade Drawing under Section 3.07 of such Liquidity
Facility. Capitalized terms used in this Section 7.01(b) shall have the
meanings specified in the Intercreditor Agreement.
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(iv) The Subordination Agent agrees, upon the request of the Lessee,
to replace the Liquidity Facility in accordance with Section 3.6(e) of the
Intercreditor Agreement
Section 5.13. Amendments to the Indenture.
Each of the Owner Trustee and the Indenture Trustee agrees that it
will not during the Term enter into any amendment or supplement to the Indenture
without the prior consent of the Lessee, if such amendment or supplement would
have the effect of limiting any right or of increasing any obligation or
liability of the Lessee under the terms of the Lease or any other Operative
Agreement.
ARTICLE 6.
TAXES
Section 6.01. Lessee's Obligation to Pay Taxes.
(a) Generally. The Lessee agrees promptly to pay when due, and to
indemnify and hold each Tax Indemnitee harmless from all license, recording,
documentary, registration and other fees and all taxes (including, without
limitation, income, gross receipts, sales, rental, use, value added, property
(tangible and intangible), ad valorem, excise and stamp taxes), fees, levies,
imposts, recording duties, duties, charges, assessments or withholdings of any
nature whatsoever, together with any assessments, penalties, fines, additions to
tax or interest thereon (individually, a "Tax," and collectively called
"Taxes"), however imposed or asserted (whether imposed upon any Tax Indemnitee,
the Lessee, all or any part of the Aircraft, Airframe, any Engine or any Part or
the Lessor's Estate, the Trust Indenture Estate, Rent, the Equipment Notes or
otherwise upon or with respect to any Operative Agreement, any payments
thereunder or otherwise in connection therewith), by any Federal, state or local
government or taxing authority in the United States, or by any government or
taxing authority of a foreign country or of any political subdivision or taxing
authority thereof or by a territory or possession of the United States or an
international taxing authority relating to or measured by:
(i) the construction, mortgaging, financing, refinancing, purchase,
acceptance, rejection, delivery, nondelivery, transport, location,
ownership, registration, reregistration, deregistration, insuring,
assembly, possession, repossession, operation, use, non-use, condition,
maintenance, repair, improvement, conversion, sale, return, abandonment,
preparation, installation, storage, redelivery, replacement, manufacture,
leasing, subleasing, subsubleasing, modification, alteration, rebuilding,
importation, transfer of title, transfer of registration, exportation or
other application or disposition of, or the imposition of any Lien (or the
incurrence of any liability to refund or pay over any amount as a result
of any Lien) on, the Aircraft, the Airframe, any Engine or any Part or any
interest therein;
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(ii) amounts payable under the Operative Agreements;
(iii) the Aircraft, or the income or other proceeds received with
respect to the Aircraft attributable to the transactions contemplated by
the Operative Agreements, held by the Owner Trustee under the Trust
Agreement or after an Event of Default under the Lease, or by the
Indenture Trustee under the Indenture;
(iv) otherwise with respect to any Operative Agreement, any interest
therein or by reason of the transactions described in or contemplated by
the Operative Agreements;
(v) the principal or interest or other amounts payable with respect
to the Equipment Notes;
(vi) the Pass-Through Certificates or the Equipment Notes or the
issuance, sale, acquisition, reoptimization, or refinancing thereof or the
beneficial interests in the Trust Estate or the Trust Indenture Estate or
the creation thereof under the Trust Agreement or the Indenture, or the
security interest created or perfected thereby or by any filing thereof;
(vii) any assumption by the Lessee pursuant to Section 5.10 of this
Agreement;
(viii) the Aircraft, the Airframe, any Engine or any Part; or
(ix) the rentals (including Basic Rent and Supplemental Rent),
receipts or earnings arising from the Operative Agreements.
(b) Exceptions. The indemnity provided for in Section 6.01 (a) shall
not extend to any of the following:
(i) With respect to a Tax Indemnitee, Taxes, whether imposed by
withholding or otherwise, based upon, measured by or with respect to the
net or gross income, items of tax preference or minimum tax or excess
profits, receipts, capital, franchise, net worth (whether, denominated
income, excise, capital stock, or doing business taxes) or other
similarly-based taxes (other than sales, use, value-added, transfer,
rental, ad valorem, stamp, property, or similar taxes) ("Income Taxes")
imposed by the United States or by any state, local or foreign
jurisdiction in which such Tax Indemnitee is subject to tax without regard
to the transactions contemplated by the Operative Agreement, provided,
however, that this clause (i) shall not exclude from the indemnity
described in Section 6.01(a) above any such Income Taxes to the extent
such taxes are imposed by any jurisdiction other than the United States or
any state or local taxing authority located therein in which the Tax
Indemnitee would not be subject to taxes of such type but for, or would be
subject to such taxes of such type solely as a result
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of, (x) the operation, registration, location, presence, or use of the
Aircraft, Airframe, any Engine or any Part thereof, in such jurisdiction
or (y) the place of incorporation or principal office or the activities of
the Lessee or any Affiliate thereof or any sublessee in such jurisdiction
(it being understood that (A) any such indemnity payable only to the
extent of the net harm incurred by the Tax Indemnitee from such Income
Taxes, taking into account any incremental Tax benefit in another tax
jurisdiction resulting from payment of such Income Taxes and (B) no
indemnity is payable with respect to Income Taxes imposed by any
jurisdiction in which the Tax Indemnitee is already subject to Income Tax;
(ii) Taxes on items of tax preference or any minimum tax or
alternative minimum tax;
(iii) Taxes imposed with respect to any period after the earlier of
(A) the discharge in full of the Lessee's obligation, if any, to pay
Termination Value under and in accordance with the Lease, (B) the
expiration of the Term of the Lease or (C) the termination of the Lease in
accordance with the applicable provisions of the Lease thereof;
(iv) As to the Owner Trustee, Taxes imposed against the Owner
Trustee upon or with respect to any fees for services rendered in its
capacity as Owner Trustee under the Trust Agreement or, as to the
Indenture Trustee, Taxes imposed against the Indenture Trustee upon or
with respect to any fees received by it for services rendered in its
capacity as Indenture Trustee under the Indenture;
(v) With respect to any Tax Indemnitee, Taxes resulting from the
willful misconduct or gross negligence of any Tax Indemnitee or the breach
by any Tax Indemnitee of any representation, warranty or covenant
contained in the Operative Agreements or any document delivered in
connection therewith (unless attributable to a breach of representation,
warranty or covenant of the Lessee);
(vi) Taxes imposed on the Owner Trustee or the Owner Participant or
any successor, assign or Affiliate thereof which became payable by reason
of any voluntary or involuntary transfer or disposition by such Tax
Indemnitee subsequent to the Delivery Date, including revocation of the
Trust, of any interest in some or all of the Aircraft, Airframe, Engines
or Parts thereof or its interest in the Lessor's Estate (not including any
transfers of any Certificates pursuant to Section 13.01 (a) hereof) or a
disposition in connection with a bankruptcy or similar proceedings
involving either the Lessor or the Owner Participant or a transfer or
disposition of shares or other interests in the Owner Trustee or the Owner
Participant or a transfer or disposition of shares or other interests in
the Owner Trustee or the Owner Participant other than (A) transfers
resulting from a loss, substitution or modification of the Aircraft,
Engines or any Part, (B) transfers pursuant to the Lessor's exercise of
remedies
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in accordance with Section 17 of the Lease or (C) a transfer pursuant to
the Lessee's exercise of its rights under Section 3(g) of the Lease; the
parties agree to cooperate to minimize any such Taxes covered by this
provision;
(vii) Taxes subject to indemnification by the Lessee pursuant to the
Tax Indemnity Agreement;
(viii) Taxes imposed on a successor, assign or other transferee of
any interest of any Tax Indemnitee (including, without limitation, a
transferee which is a new lending office of an original Tax Indemnitee) to
the extent that such Taxes would not have been imposed on the original Tax
Indemnitee or exceed the amount of Taxes that would have been imposed and
would have been indemnifiable pursuant to Section 6.01(a) hereof had there
not been a succession, assignment or other transfer by such original Tax
Indemnitee of any such interest of such Tax Indemnitee in the Aircraft or
any Part, any interest in or under any Operative Agreement, or any
proceeds thereunder;
(ix) Taxes imposed by any jurisdiction that would not have been
imposed on the Owner Trustee or the Owner Participant but for the
activities or the status of the Owner Trustee or the Owner Participant in
such jurisdiction unrelated to the transactions contemplated by the
Operative Agreements;
(x) Any Taxes which have been included in the Purchase Price;
(xi) any Taxes which would not have been imposed but for a Lessor's
Lien or an Indenture Trustee's Lien;
(xii) Any Taxes imposed on the Owner Participant arising under or in
connection with any prohibited transaction, within the meaning of Section
406 of ERISA or Section 4975(c)(1) of the Code or any similar provision of
state law ("Prohibited Transaction");
(xiii) Taxes that would not have been imposed but for the existence
or status of any trust used to hold title to the Aircraft;
(xiv) Taxes in the nature of an intangible or similar Tax imposed on
or with respect to the Equipment Notes (or the indebtedness evidenced
thereby), the Pass-Through Certificates, the Trust Estate or the Trust
Agreement;
(xv) Taxes that are being contested in accordance with the
provisions hereof;
(xvi) Any value-added Taxes imposed by the federal government of the
United States; or
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(xvii) United States withholding Taxes imposed on payments to a
foreign person.
(c) Withholding. The Pass-Through Trustee shall withhold any Taxes
required by law to be withheld on payments to any holder of a Pass-Through
Certificate. The Indenture Trustee shall withhold any Taxes required to be
withheld on any payment to a Holder pursuant to Section 5.09 of the Indenture.
If the Indenture Trustee or the Pass-Through Trustee fails to withhold a Tax
required to be withheld with respect to any Holder of a Certificate or any
holder of a Pass-Through Certificate or any claim is otherwise asserted by a
taxing authority against the Owner Trustee or Owner Participant for any
withholding tax, the Lessee will indemnify the Owner Trustee and the Owner
Participant (without regard to the exclusions set forth in Section 6.01(b)
hereof) on an After-Tax Basis against any such Taxes required to be withheld and
any interest and penalties with respect thereto, along with any other costs
(including reasonable attorney's fees) incurred in connection with any such
claim. The Indenture Trustee or the Pass-Through Trustee, as the case may be, in
its individual capacity (and without recourse to the Trust Indenture Estate),
shall indemnify the Lessee (without regard to the exclusions set forth in
Section 6.01(b) hereof) on an After-Tax Basis for any payment the Lessee shall
have made pursuant to the preceding sentence.
Section 6.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Tax indemnified against under Section 6.01
shall be an amount sufficient to restore the Tax Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Tax not been
incurred, taking into account any tax benefits recognized by such Tax Indemnitee
as a result of the Indemnifiable Tax. If any Tax Indemnitee realizes a Tax
benefit (whether by credit, deduction or otherwise), or would have realized such
a benefit if properly claimed, by reason of the payment of any Tax paid or
indemnified against by the Lessee, such Tax Indemnitee shall promptly pay to the
Lessee, to the extent such Tax benefit was not previously taken into account in
computing such payment, but not before the Lessee shall have made all payments
then due to such Tax Indemnitee under this Agreement, the Tax Indemnity
Agreement and any other Operative Agreement, an amount equal to the lesser of
(x) the sum of such tax benefit plus any other tax benefit realized by such Tax
Indemnitee that would not have been realized but for any payment made by such
Tax Indemnitee pursuant to this sentence and not already paid to the Lessee, and
(y) the amount of the payment made under Section 6.01 hereof and this Section
6.02 by the Lessee to such Tax Indemnitee plus the amount of any other payments
by the Lessee to such Tax Indemnitee theretofore required to be made under this
Section 6.02 and Sections 6.01 and 6.05 hereof (and the excess, if any, of the
Tax benefit over the applicable amount described in clause (x) or clause (y)
above shall be carried forward and applied to reduce pro tanto any subsequent
obligations of the Lessee to make payments to such Tax Indemnitee pursuant to
Section 6.01 hereof). The Lessee shall reimburse on an After-Tax Basis such Tax
Indemnitee (subject to Section 6.01(b) hereof) for any payment of a tax benefit
pursuant to the preceding sentence (or a tax
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benefit otherwise taken into account in calculating the Lessee's indemnity
obligation hereunder) to the extent that such tax benefit is subsequently
disallowed or reduced.
In determining the order in which any Tax Indemnitee utilizes
withholding or other foreign taxes as a credit against such Tax Indemnitee's
United States income taxes, such Tax Indemnitee shall be deemed to utilize (i)
first, all foreign taxes other than those described in clause (ii) below;
provided, that such other foreign taxes which are carried back to the taxable
year for which a determination is being made shall be deemed utilized after
foreign taxes described in clause (ii) below, and (ii) then, on a pro rata
basis, all foreign taxes with respect to which such Tax Indemnitee is entitled
to obtain indemnification pursuant to an indemnification provision contained in
any lease, loan agreement, or other financing document (including this
Participation Agreement) that is similar to the indemnification provision in
this Article 6.
Notwithstanding the preceding paragraph, if foreign taxes of a Tax
Indemnitee have been indemnified hereunder and all such indemnified foreign
taxes have not been used to produce a credit against such Tax Indemnitee's
United States income taxes resulting in the realization of a tax benefit paid to
the Lessee in accordance with the first paragraph of this Section 6.02, a tax
benefit will be deemed to be attributable to such indemnified foreign taxes to
the extent that an item of income derived from the transactions contemplated in
the Operative Agreements is allocable to sources outside the United States and
such allocation results in an increase in the amount of foreign tax credit such
Tax Indemnitee is entitled to use in any taxable year over the amount of foreign
tax credit such Tax Indemnitee would have been entitled to use if such foreign
source allocation had not occurred.
Section 6.03. Time of Payment. Any amount payable to a Tax
Indemnitee pursuant to this Article 6 shall be paid promptly, but in any event
within 30 days after receipt of a written demand therefor from such Tax
Indemnitee accompanied by a written statement describing in reasonable detail
the basis for such indemnity and the computation of the amount so payable,
provided that in the case of amounts which are being contested by the Lessee in
good faith or by the Tax Indemnitee in either case pursuant to Section 6.04
hereof, or subject to verification proceedings pursuant to Section 6.11 hereof,
such amount shall be payable within 30 days after the time such contest or
verification proceeding, as the case may be, is finally resolved. In no event
shall any amount be payable under Section 6.01 until one Business Day prior to
the due date for Tax in issue.
Section 6.04. Contests. If a written claim is made against any Tax
Indemnitee for Taxes with respect to which the Lessee is liable for a payment or
indemnity hereunder, such Tax Indemnitee shall promptly (but in any event within
30 days of receipt thereof) give the Lessee notice in writing of such claim and
shall furnish the Lessee with copies of any written requests for information
sent to such Tax Indemnitee from any taxing authority to the extent relating to
such Taxes with respect to which the Lessee may be required to indemnify
hereunder; provided, however, that the failure of an Tax Indemnitee to give such
notice or furnish such copy shall not
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terminate any of the rights of such Tax Indemnitee under this Article 6, except
(a) to the extent that the Lessee's contest rights have been materially and
adversely impaired by the failure to provide such notice or copy or (b) to the
extent that such failure results in the imposition of, or an increase in the
amount of, any penalties, interest or additions to Tax related to the Tax which
is the subject of such claim or proceeding. The Lessee may, at its option,
contest in its own name or require the Tax Indemnitee to contest in good faith,
with due diligence and at the Lessee's expense, if timely requested in writing
by the Lessee, the validity, applicability or amount of such Taxes by:
(a) resisting payment thereof if lawful and practicable or not
paying the same except under protest if protest is necessary and proper in each
case so long as non-payment will not result in a material risk of the sale,
forfeiture or loss of, or the creation of a Lien other than a Permitted Lien on
the Aircraft, Airframe or any Engine or any risk of criminal liability; or
(b) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings.
If requested by the Lessee, the Tax Indemnitee shall appeal any
adverse administrative or judicial decision, except that the Tax Indemnitee
shall not be required to pursue any appeals to the United States Supreme Court.
Notwithstanding the foregoing, the Lessee shall not be permitted or entitled to
contest any such Tax in its own name unless the Tax is reflected in a report or
a return of the Lessee or raised in an audit or other proceeding of the Lessee,
and the Lessee is allowed to contest such Tax under applicable law of the taxing
jurisdiction. If the Lessee is permitted under applicable law to contest a Tax
asserted against the Lessee and the same or similar Tax is also asserted against
the Tax Indemnitee, each of the Lessee and such Tax Indemnitee shall conduct its
contest in its own name and the Lessee and such Tax Indemnitee will cooperate in
a reasonable manner with respect to the respective contests of such Tax.
If the Tax Indemnitee, after reasonable discussion with the Lessee
and consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such Tax
Indemnitee shall control the contest and shall determine the manner in which to
contest such Taxes and shall periodically or upon the Lessee's request advise
the Lessee of the progress of such contest; provided, however, that the Lessee
shall have the right to be consulted in good faith with respect to any contest
of claims subject to indemnification hereunder and to participate in any contest
proceeding, including governmental and judicial conferences, and the right to be
consulted in good faith regarding the relevant portions of all related
submissions to any governmental or other authority; provided, further, that the
Lessee shall be permitted to participate directly in any such contest only (x)
with respect to issues that can be separated on audit from any Taxes for which
the Lessee is not required to indemnify the Tax Indemnitee hereunder, and (y) if
the Tax Indemnitee shall have reasonably determined that neither such
participation nor the separation of
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issues will adversely affect the Tax Indemnitee. Notwithstanding the foregoing
provisions of this paragraph, if the Lessee acknowledges in writing its
liability to the Tax Indemnitee hereunder with respect to the Taxes subject to
the contest if the contest is resolved adversely, the Lessee shall control such
contest. If the Lessee satisfies the conditions imposed on it in this Section
6.04 and a Tax Indemnitee nevertheless fails to contest and refuses to permit
the Lessee to contest under and as and to the extent required by this Section
6.04, then the Lessee shall not be obligated to indemnify such Tax Indemnitee
for such claim or for any other claim for which a successful contest is
adversely affected because of such failure to contest or to permit a contest.
The Tax Indemnitee will not settle a contest that results in a final
determination without consent of the Lessee, unless the Tax Indemnitee waives
its right to indemnification with respect to such contest and any related
contest. Any such settlement, concession, or compromise without the prior
written consent of the Lessee shall constitute a waiver of such Tax Indemnitee's
rights to indemnification hereunder with respect to such claim and any other
claim for which a successful contest is adversely affected because of such
settlement, concession, or compromise. Notwithstanding the preceding sentences
of this Section 6.04, such Tax Indemnitee shall not be required to take or
continue any action unless the Lessee shall have agreed to pay the Tax
Indemnitee on a current basis all reasonable fees and expenses (including
reasonable attorneys' fees and accountants' fees) which such Tax Indemnitee may
incur as a result of contesting such Taxes. In no event shall such Tax
Indemnitee be required or the Lessee be permitted to contest pursuant to this
Section 6.04 the imposition of any Tax for which the Lessee is obligated to
indemnify any Tax Indemnitee hereunder unless (i) such contest will not result
in any material risk of loss, sale or forfeiture of, or the creation of a Lien
(other than Permitted Liens) on, the Aircraft or any part thereof or interest
thereon or in a risk of criminal liability, (ii) if a Specified Default exists,
the Lessee shall have provided security for its obligations hereunder reasonably
satisfactory to the Tax Indemnitee, and (iii) if such contest shall be conducted
in a manner requiring payment of the claim in advance, the Lessee shall have
advanced sufficient funds, on an interest free basis, to make the payment
required, and agreed to indemnify the Tax Indemnitee against any additional net
adverse tax consequences on an After-Tax Basis to such Tax Indemnitee of such
advance; provided, that in the event that such Tax Indemnitee is not required
under this paragraph to contest any Tax liability for which the Lessee is
obligated to indemnify any Tax Indemnitee, the Lessee may contest such Tax
liability in the name of the Lessee, if permitted by law.
Nothing contained in this Section 6.04 shall require any Tax
Indemnitee to contest or continue to contest, or permit Lessee to contest, a
claim which such Tax Indemnitee would otherwise be required to contest pursuant
to this Section 6.04, if such Tax Indemnitee shall waive payment by Lessee of
any amount that might otherwise be payable by Lessee under this Article 6 in
connection with such claim.
Section 6.05. Refunds. When a Tax Indemnitee becomes entitled to
receive a refund or credit against Tax of all or any part of any Taxes which the
Lessee shall have paid for such Tax Indemnitee or for which the Lessee shall
have reimbursed
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or indemnified such Tax Indemnitee, such Tax Indemnitee shall pay to the Lessee
an amount equal to the amount of such refund or credit less (x) all payments
then due to such Tax Indemnitee under this Article 6, and (y) Taxes imposed with
respect to the accrual or receipt thereof, including interest received
attributable thereto, plus any tax benefit realized by such Tax Indemnitee as a
result of any payment by such Tax Indemnitee made pursuant to this sentence;
provided, however, that such amount shall not be payable (a) before such time as
the Lessee shall have made all payments or indemnities then due and payable to
such Tax Indemnitee under this Article 6 and (b) to the extent that the amount
of such payment would exceed (i) the amount of all prior payments by the Lessee
to such Tax Indemnitee pursuant to this Article 6 less (ii) the amount of all
prior payments by such Tax Indemnitee to the Lessee pursuant to this Article 6
(any such excess shall be carried forward to reduce pro tanto any subsequent
obligations of the Lessee to make payments to such Tax Indemnitee pursuant to
Section 6.01 hereof.
Any subsequent loss of such refund or tax benefit shall be treated
as a Tax subject to indemnification under the provisions of this Article 6 (in
the case of any such tax benefit, subject to Section 6.01 (b) hereof).
Section 6.06. Reports. In case any report or return is required to
be made with respect to any Taxes against which the Lessee is or may be
obligated to indemnify the Indemnities under this Article 6, the Lessee shall,
to the extent it has knowledge thereof, make such report or return, except for
any such report or return that the Tax Indemnitee has notified the Lessee that
it intends to file, in such manner as will show the ownership of the Aircraft in
the Owner Trustee and shall send a copy of the applicable portions of such
report or return to the Tax Indemnitee and the Owner Trustee or will notify the
Tax Indemnitee of such requirement and make such report or return in such manner
as shall be satisfactory to such Tax Indemnitee and the Owner Trustee. The
Lessee will provide such information within the possession or control of the
Lessee as the Tax Indemnitee may reasonably request in writing from the Lessee
to enable the Tax Indemnitee to fulfill its tax filing requirements with respect
to the transactions contemplated by the Operative Agreements (without
duplication of any comparable requirements of the Tax Indemnity Agreement) and
any audit information request arising from any such filing. The Tax Indemnitee
will provide such information within its possession or control as the Lessee may
reasonably require from such Tax Indemnitee to enable the Lessee to fulfill its
tax filing requirements with respect to the transactions contemplated by the
Operative Agreements and any audit information request arising from such filing;
provided that in no event shall any Tax Indemnitee be required to provide copies
of any of its tax returns. If an Tax Indemnitee makes any representation
regarding the value of the Aircraft or any part thereof to any taxing authority
without the Lessee's prior written consent as to the value represented (which
consent shall not be unreasonably withheld), that Tax Indemnitee shall be
responsible for any Tax to the extent that it would not have been payable if the
value used were a value reasonably proposed by the Lessee.
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Section 6.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 6 and the Lessee's obligations under any and all of them, in each case,
with respect to events or periods prior to the expiration or termination of the
Lease shall survive the expiration or other termination of the Operative
Agreements.
Section 6.08. Payment of Taxes. With respect to any Tax otherwise
indemnifiable hereunder by the Lessee and applicable to the Aircraft, Airframe,
any Engine or Parts, to the extent permitted by the applicable federal, state,
local or foreign law, the Lessee shall pay such tax directly to the relevant
Taxing authority and file any returns or reports required with respect thereto
to the extent legally entitled to do so in its own name; provided, however, that
the Lessee shall not make any statements or take any action which would indicate
that the Lessee or any Person other than the Owner Trustee or Owner Participant
is the owner of the Aircraft, the Airframe, any Engine or any Part or which
would otherwise be inconsistent with the terms of the Lease or the Tax Indemnity
Agreement and the position thereunder of the Owner Trustee and the Owner
Participant.
Section 6.09. Reimbursements by Indemnities Generally. To the extent
the Lessee is required to pay or withhold any Tax imposed on or with respect to
an Tax Indemnitee in respect of the transactions contemplated by the Operative
Agreements, which Tax is not otherwise the responsibility of the Lessee under
the Operative Agreements, or any other written agreements between the Lessee and
such Tax Indemnitee, then such Tax Indemnitee shall pay to the Lessee within 30
days of the Lessee's demand therefor an amount which equals the amount actually
paid by the Lessee with respect to such Taxes.
Section 6.10. Forms. Each Tax Indemnitee agrees to furnish from time
to time to Lessee or to such other person as Lessee may designate, at Lessee's
request, such duly executed and properly completed forms as may be necessary or
appropriate in order to claim any reduction of or exemption from any withholding
or other Tax imposed by any taxing authority, if (x) such reduction or exemption
is available to such Tax Indemnitee and (y) Lessee has provided such Tax
Indemnitee with any information necessary to complete such form not otherwise
reasonably available to such Tax Indemnitee.
Section 6.11. Verification. At the Lessee's request, the accuracy of
any calculation of amount(s) payable pursuant to this Article 6 shall be
verified by independent public accountants selected by the applicable Tax
Indemnitee and reasonably satisfactory to the Lessee, and such verification
shall bind the applicable Tax Indemnitee and the Lessee. In order, and to the
extent necessary, to enable such independent accountants to verify such amounts,
such Tax Indemnitee shall provide to such independent accountants (for their
confidential use and not to be disclosed to the Lessee or any other person) all
information reasonably necessary for such verification. Verification shall be at
the expense of the Lessee, unless such verification results in an adjustment in
the Lessee's favor of $10,000 or more of the amount of the payment as
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computed by such Tax Indemnitee, in which case the verification shall be at the
expense of the Tax Indemnitee.
Section 6.12. Non-Parties. If an Tax Indemnitee is not a party to
this Agreement, Lessee may require the Tax Indemnitee to agree in writing, in a
form reasonably acceptable to Lessee, to the terms of this Article 6 prior to
making any payment to such Tax Indemnitee hereunder.
ARTICLE 7.
GENERAL INDEMNITY
Section 7.01. Generally.
(a) Indemnity. The Lessee agrees to indemnify each Indemnitee
against and agrees to protect, defend, save and keep harmless each Indemnitee
against and in respect of, and will pay on an After-Tax Basis, from any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs, disbursements and expenses, demands or judgments (including reasonable
legal fees and expenses) of every kind and nature, whether or not any of the
transactions contemplated by this Agreement are consummated (individually, an
"Expense," collectively, "Expenses"), which may be imposed on, incurred or
suffered by or asserted against any Indemnitee, in any way relating to, arising
out of or in connection with, any one or more of the following:
(i) any Operative Agreement or Pass-Through Document or any
transaction contemplated thereby;
(ii) the operation, possession, use, non-use, maintenance, storage,
overhaul, delivery, non-delivery, control, repair or testing of the
Aircraft, Airframe, or any Engine or any engine used in connection with
the Airframe, or any Part thereof by the Lessee, any sublessee or any
other Person whatsoever, whether or not such operation, possession, use,
non-use, maintenance, storage, overhaul, delivery, non-delivery, control,
repair or testing is in compliance with the terms of the Lease, including,
without limitation, claims for death, personal injury or property damage
or other loss or harm to any Person whatsoever, including, without
limitation, any passengers, shippers or other Persons wherever located,
and claims or penalty relating to any laws, rules or regulations,
including, without limitation, environmental control, noise and pollution
laws, rules or regulation;
(iii) the manufacture, design, sale, return, purchase, acceptance,
rejection, delivery, non-delivery, condition, repair, modification,
servicing, rebuilding, airworthiness, registration, reregistration,
deregistration, ownership, financing, import, export, performance,
non-performance, lease, sublease, transfer, merchantability, fitness for
use, alteration, substitution or replacement
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of any Airframe, Engine, or Part or other transfer of use or possession,
or other disposition of the Aircraft, the Airframe, any Engine or any Part
including, without limitation, latent and other defects, whether or not
discoverable, strict tort liability, and any claims for patent, trademark
or copyright infringement;
(iv) any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Lessee under any of the Operative Agreements
or any Pass-Through Trust Agreement, or the falsity or inaccuracy of any
representation or warranty of the Lessee in any of the Operative
Agreements or any Pass-Through Trust Agreement (other than representations
and warranties in the Tax Indemnity Agreement);
(v) the enforcement of the terms of the Operative Agreements; and
(vi) the offer, issuance, sale or delivery of any Equipment Note,
any Pass-Through Certificate or interest in the Lessor's Estate or the
Trust Agreement or any similar interest.
(b) Exceptions. The indemnity provided for in Section 7.01(a) shall
not extend to any Expense of any Indemnitee to the extent it:
(i) is attributable to the willful misconduct or gross negligence of
such Indemnitee (other than gross negligence or willful misconduct imputed
to such person by reason of its interest in the Aircraft or any
transaction documents);
(ii) is attributable to acts or events (other than the performance
by Lessee of its obligations pursuant to the terms of the Operative
Agreements) which occur after the Aircraft is no longer part of the
Lessor's Estate or, if the Aircraft remains a part of the Lessor's Estate,
after the expiration of the Term (unless the Aircraft is being returned at
such time, in which case after return of physical possession; provided
that if the Lease has been terminated pursuant to Section 17 thereof, the
indemnity provided in Section 7.01(a) hereof shall survive for so long as
Lessor or the Indenture Trustee shall be exercising remedies under such
Section 17), or to acts or events which occur after return of possession
of the Aircraft by the Lessee in accordance with the provisions of the
Lease (subject to the foregoing proviso if the Lessor has terminated the
Lease pursuant to Section 17 of the Lease);
(iii) is a Tax or loss of a Tax benefit, whether or not the Lessee
is required to indemnify therefor pursuant to Article 6 hereof or pursuant
to the Tax Indemnity Agreement;
(iv) is a cost or expense required to be paid by an Indemnitee or
its permitted transferees (and not by the Lessee) pursuant to this
Agreement or any other Operative Agreement and for which the Lessee is not
otherwise obligated
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to reimburse such Indemnitee, directly or indirectly pursuant to the terms
of this Agreement or such other Operative Agreement;
(v) is attributable to the incorrectness or breach by such
Indemnitee of its representations or warranties, under any of the
Operative Agreements;
(vi) is attributable to the failure by such Indemnitee to perform
any of its obligations under any of the Operative Agreements;
(vii) is, in the case of the Owner Participant, Lessor's Liens
attributable to the Owner Participant; in the case of the Owner Trustee,
Lessor's Liens to the extent attributable to the Owner Trustee; in the
case of Trust Company, Lessor's Liens to the extent attributable to Trust
Company; and in the case of the Indenture Trustee, Indenture Trustee's
Liens;
(viii) is, in the case of the Owner Participant or the Owner
Trustee, attributable to the offer or sale by such Indemnitee of any
interest in the Aircraft, the Lessor's Estate or the Trust Agreement or
any similar interest (including an offer or sale resulting from bankruptcy
or other proceedings for the relief of debtors in which such Indemnitee is
the debtor), unless in each case such offer or sale shall occur pursuant
to the exercise of remedies under Section 17 of the Lease;
(ix) is an Expense arising under or in connection with any
"prohibited transaction", within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Code or any similar provision of state law;
(x) except during the continuation of an Event of Default, is
attributable to any amendment to any of the Operative Agreements which is
not requested by the Lessee or is not required or made pursuant to the
terms of any of the Operative Agreements;
(xi) is attributable to the exercise by any Indemnitee of any right
to inspect the Aircraft except with respect to any such inspection
conducted while an Event of Default is continuing; and
(xii) constitutes the loss of future profits or losses attributable
to such Indemnitee's overhead.
Section 7.02. Notice and Payment. Each Indemnitee shall give prompt
written notice to the Lessee of any liability for which the Lessee is, or may
be, liable under this Article 7; provided, however, that failure to give such
notice shall not terminate any of the rights of an Indemnitee under this Article
7, except to the extent that such failure adversely affects any applicable
defense or counterclaim, otherwise increases the amount the Lessee would have
been liable for in the absence of such
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failure to provide such notice or adversely affects the ability of Lessee's
insurers to defend such claim.
Section 7.03. Defense of Claims. The Lessee or its insurers shall
have the right (in each such case at the Lessee's sole expense) to investigate,
defend (and control the defense of) any such claim for which indemnification is
sought pursuant to this Article 7 and each Indemnitee shall cooperate with the
Lessee or its insurers with respect thereto, provided that, without limiting the
right of the Lessee's insurers to assume and control the defense of, or to
compromise, any such claim, the Lessee shall not be entitled to assume and
control the defense of or compromise any such claim (A) during the continuance
of any Event of Default arising under Section 14(a) of the Lease, (B) if an
actual or potential material conflict of interest exists making it advisable (on
the basis of prevailing standards of professional responsibility) for such
Indemnitee to be represented by separate counsel or on the grounds that such
proceeding involves the potential imposition of criminal liability on such
Indemnitee or (C) such proceeding will involve any material risk of the sale,
forfeiture or loss of, or the creation of any Lien (other than Permitted Liens)
on the Aircraft or the Trust Estate (unless the Lessee posts a bond or other
security reasonably acceptable in form and substance to such Indemnitee) or
involve any material risk of criminal liability to such Indemnitee for which it
is not indemnified hereunder and, in any such case, the relevant Indemnitee
will, in good faith, undertake the defense of such claim at the expense of the
Lessee. Subject to the immediately foregoing sentence, where the Lessee or the
insurers under a policy of insurance maintained by the Lessee undertake the
defense of an Indemnitee with respect to such a claim, no additional legal fees
or expenses of such Indemnitee in connection with the defense of such claim
shall be indemnified hereunder unless the fees or expenses were incurred at the
written request of the Lessee or such insurers. Subject to the requirement of
any policy of insurance applicable to a claim, an Indemnitee may participate at
its own expense at any judicial proceeding controlled by the Lessee or its
insurers pursuant to the preceding provisions, to the extent that such party's
participation does not, in the opinion of the independent counsel appointed by
the Lessee or its insurers to conduct such proceedings, interfere with such
control; and such participation shall not constitute a waiver of the
indemnification provided in this Section 7.03. No Indemnitee shall enter into
any settlement or other compromise with respect to any claim described in this
Section 7.03 without the prior written consent of the Lessee, unless such
Indemnitee waives its right to be indemnified under this Article 7 with respect
to such claim. The Lessee shall not enter into any settlement or compromise with
respect to which the Lessee has not agreed to indemnify such Indemnitee to such
Indemnitee's satisfaction or which admits any criminal violation, gross
negligence or willful misconduct on the part of any Indemnitee without the prior
written consent of such Indemnitee.
Section 7.04. Insured Claims. Notwithstanding any other provision of
this Article 7 to the contrary, in the case of any claim indemnified by the
Lessee hereunder which is covered by a policy of insurance maintained by the
Lessee pursuant to Section 9 of the Lease or otherwise, it shall be a condition
of such indemnity with respect to any particular Indemnitee that such Indemnitee
shall cooperate with the
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insurers in the exercise of their rights to investigate, defend or compromise
such claim as may be required to retain the benefits of such insurance with
respect to such claim.
Section 7.05. Subrogation. To the extent that an Expense indemnified
by the Lessee under this Article 7 is in fact paid by the Lessee and/or an
insurer under a policy of insurance maintained by the Lessee, the Lessee and/or
such insurer as the case may be shall be subrogated to the extent of such
payment to the rights and remedies of the Indemnitee on whose behalf such
Expense was paid with respect to the transaction or event giving rise to such
Expense. Should an Indemnitee receive any refund, in whole or in part, with
respect to any Expense paid by the Lessee hereunder, it shall promptly pay over
the amount refunded, together with any interest received with respect to such
amount for the period between the indemnification payment and the receipt of
such refund, to the Lessee.
Section 7.06. Survival of Obligations. The indemnities and
agreements of the Lessee provided for in this Article 7 shall survive the
expiration or other termination of this Agreement.
Section 7.07. Effect of Other Indemnities. The Lessee's obligations
under this Article 7 shall be those of a primary obligor whether or not the
Person indemnified shall also be indemnified with respect to the same matter
under the terms of this Agreement, or any other document or instrument, and the
Person seeking indemnification from the Lessee pursuant to any provision of this
Agreement may proceed directly against the Lessee without first seeking to
enforce any other right of indemnification.
Section 7.08. Waiver of Certain Claims. The Lessee hereby waives and
releases any Claim now or hereafter existing against any Indemnified Person
arising out of death or personal injury to personnel of the Lessee, loss or
damage to property of the Lessee, or the loss of use of any property of the
Lessee, which results from or arises out of the condition, use or operation of
the Aircraft during the Term, including, without limitation, any latent or
patent defect whether or not discoverable.
Section 7.09. Certain Limitations. The Lessee does not guarantee and
nothing in the general indemnification provisions of this Article 7 shall be
construed as a guarantee (or an indemnification) by the Lessee (i) that the
principal of, premium, if any, or interest on any "Equipment Note" (as defined
in the Pass-Through Trust Agreements) will be paid or (ii) with respect to the
residual value of the Aircraft or any part thereof.
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ARTICLE 8.
TRANSACTION COSTS
Section 8.01. Transaction Costs and Other Costs.
(a) Transaction Costs. The Owner Participant shall pay (or reimburse
the Lessee if the Lessee shall have previously made such payment) all fees and
expenses of the following persons relating to the offering of the Pass-Through
Certificates contemplated by the Placement Agreement and related to the
transactions contemplated hereby: (i) the reasonable fees and expenses of
counsel for Owner Participant; (ii) the reasonable fees and expenses of the
respective counsel for the Lessee, the Owner Trustee, the Indenture Trustee, the
Manufacturer, the Subordination Agents, the Pass-Through Trustee, each Liquidity
Provider and the Placement Agents (other than those fees, expenses and
disbursements payable by the Placement Agent pursuant to the Placement
Agreement); (iii) the reasonable fees and expenses of special aviation counsel;
(iv) any initial fees and expenses of the Pass-Through Trustee and the initial
fees and expenses of the Owner Trustee, the Subordination Agent, the Indenture
Trustee; (v) any compensation, commissions and discounts payable to the
Placement Agents pursuant to the Placement Agreement; (vi) the fees and expenses
incurred in connection with printing any offering memorandum for the offering of
the Pass-Through Certificates; (vii) the fees and expenses of Xxxxx'x and S&P;
(viii) the fees and expenses of The Seabury Group LLC; (ix) any amounts paid in
connection with any appraisal report prepared for the Owner Participant; and (x)
any other amounts approved by the Lessee and the Owner Participant. The fees and
expenses described in clauses (ii) through (viii) of this paragraph shall be
allocable to the Owner Participant under this Agreement (1) to the extent
incurred specifically with respect to the Owner Participant, and (2) to the
extent such fees and expenses are incurred but are not specifically attributable
to the Owner Participant, in the proportion that the principal amount of the
Certificates bears to the total amount of the Pass-Through Certificates.
(b) Continuing Expenses. The Lessee agrees to pay, as Supplemental
Rent, (i) the continuing fees, expenses and disbursements (including reasonable
counsel fees and expenses) of the Owner Trustee, with respect to the
administration of the Lease and the Lessor's Estate; (ii) the continuing fees,
expenses and disbursements (including reasonable counsel fees and expenses) of
the Indenture Trustee, with respect to the administration of the Trust Indenture
Estate; (iii) the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses) of the Pass-Through Trustee and the
Subordination Agent; and (iv) the continuing fees, expenses and disbursements
(including reasonable counsel fees and expenses) of the Liquidity Providers as
expressly provided in each Liquidity Facility.
(c) Amendments and Supplements. Without limitation of the foregoing,
the Lessee agrees to pay, as Supplemental Rent, to the Owner Trustee, the Owner
Participant, the Indenture Trustee, the Subordination Agent, the Liquidity
Providers and the Pass-Through Trustee all costs and expenses (including
reasonable
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legal fees and expenses) incurred by any of them in connection with any
amendment, supplement, waiver or consent (whether or not entered into) under
this Agreement or any other Operative Agreement or document or instrument
delivered pursuant to any of them, which amendment, supplement, waiver or
consent is required by any provision of any Operative Agreement (including any
adjustment pursuant to Section 3(d) of the Lease) or is requested by the Lessee
or necessitated by the action or inaction of the Lessee; provided, however, that
the Lessee shall not be responsible for fees or expenses incurred in connection
with the offer, sale or other transfer (whether pursuant to Section 5.01(c)
hereof or otherwise) by the Owner Participant, the Owner Trustee, the Indemnitee
Trustee, or any Holder of any interest in the Aircraft, the Lessor's Estate, the
Beneficial Interest or the Trust Agreement or any similar interest (and the
offeror, seller, or transferor shall be responsible for all such fees and
expenses), unless such offer, sale or transfer shall occur (A) pursuant to the
exercise of remedies under Section 17 of the Lease, or (B) in connection with
the termination of the Lease or action or direction of the Lessee pursuant to
Section 8, 13 or 14 of the Lease.
ARTICLE 9.
SUCCESSOR OWNER TRUSTEE
Section 9.01. Appointment of Successor Owner Trustee.
(a) Resignation and Removal. The Owner Trustee or any successor
Owner Trustee may resign or may be removed (with the consent of the Lessee) by
the applicable Owner Participant, and a successor Owner Trustee may be appointed
and a Person may become Owner Trustee under the Trust Agreement only in
accordance with the provisions of Section 3.11 of the Trust Agreement and the
provisions of paragraphs (b) and (c) of this Section 9.01.
(b) Conditions to Appointment. The appointment in any manner of a
successor Owner Trustee pursuant to Section 3.11 of the Trust Agreement shall be
subject to the following conditions:
(i) such successor Owner Trustee shall be a Citizen of the United
States;
(ii) such successor Owner Trustee shall be a bank or a trust company
having combined capital, surplus and undivided profits of at least
$100,000,000 or a bank or trust company fully guaranteed by a direct or
indirect parent thereof having a combined capital, surplus and undivided
profits of at least $100,000,000;
(iii) such appointment shall not violate any provisions of the
Transportation Code or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered or create a relationship which would be in
violation of the
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Transportation Code or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered;
(iv) such successor Owner Trustee shall enter into an agreement or
agreements, in form and substance reasonably satisfactory to the Lessee,
the Owner Participant, the Pass-Through Trustee and the Indenture Trustee
whereby such successor Owner Trustee confirms that it shall be deemed a
party to this Agreement and each other Operative Agreement to which the
Owner Trustee is a party and agrees to be bound by all the terms of such
documents applicable to the Owner Trustee and makes the representations
and warranties contained in Section 5.04 hereof (except that it may be
duly incorporated, validly existing and in good standing under the laws of
the United States of America or any State thereof); and
(v) all filings of Uniform Commercial Code financing and
continuation statements, filings in accordance with the Transportation
Code and amendments thereto shall be made and all further actions taken in
connection with such appointment as may be necessary in connection with
maintaining the validity, perfection and priority of the Lien of the
Indenture and the valid and continued registration of the Aircraft in
accordance with the Transportation Code.
ARTICLE 10.
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND
HOLDERS
Section 10.01. Liabilities of the Owner Participant. The Owner
Participant shall not have any obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Indenture, the
Trust Agreement, the Tax Indemnity Agreement, the Lease or any other Operative
Agreement to which the Owner Participant is a party and the Owner Participant
shall not be liable for the performance by any other party hereto of such other
party's obligations or duties hereunder.
Section 10.02. Interest of Holders of Equipment Notes. Each Holder
of an Equipment Note shall have no further interest in, or other right with
respect to, the Trust Indenture Estate when and if the principal and interest on
all Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Equipment Notes shall
have been paid in full.
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ARTICLE 11.
OTHER DOCUMENTS
Section 11.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the Indenture,
the Trust Agreement, the Intercreditor Agreement and the Liquidity Facilities.
Section 11.02. Pass-Through Trustee's and Subordination Agent's
Acknowledgment. The Pass-Through Trustee and the Subordination Agent hereby
acknowledge and agree to be bound by all of the terms and conditions of the
Indenture, including without limitation, Section 8.02 thereof regarding the
rights of the Owner Participant to purchase the Equipment Notes under the
circumstances specified therein.
ARTICLE 12.
NOTICES
Section 12.01. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the appropriate
telephonic confirmation received if transmitted on a Business Day and during
normal business hours of the recipient, and otherwise on the next Business Day
following transmission, or (b) if given by certified mail, return receipt
requested, by courier service, or by any other commercially customary means,
when received or personally delivered, addressed:
(a) if to the Lessee, to its office at 000 X. Xxxxxx Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxx Xxxxxxxx, Attention: General Counsel, telephone (919)
000-0000, facsimile (000) 000-0000; or to such other address as the Lessee
shall from time to time designate in writing to the Lessor, the Indenture
Trustee and any Owner Participant;
(b) if to the Lessor or the Owner Trustee, to its office at One
Xxxxxx Square North, 000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx
00000, Attention: Corporate Trust Administration, telephone (302)
000-0000, facsimile (000) 000-0000; or to such other address as the Lessor
shall from time to time designate in writing to the Lessee and the
Indenture Trustee, with a copy to the Owner Participant;
(c) if to the Owner Participant to its office at ___________________
_________________, Attention: __________________, telephone ______________
facsimile _______________; or to such other address as the Owner
Participant shall from time to time designate in writing to the Lessee,
and the Owner Trustee and the Indenture Trustee;
(d) if to the Indenture Trustee, the Subordination Agent or the
Pass-Through Trustee, to its office at 00 Xxxxx Xxxxxxx Xxxxxx, Mail Code
101-591,
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Xxxxxxxxx, Xxxxxxxx 00000 Attention: Corporate Trust Department, telephone
(000) 000-0000 facsimile (000) 000-0000; or to such other address as the
Indenture Trustee or the Pass-Through Trustee, as the case may be, shall
from time to time designate in writing to the Lessor, the Lessee and the
Owner Participant; and
(e) if to the Liquidity Provider, to its office at _______________,
or to such other address as a Liquidity Provider shall from time to time
designate in writing to the Lessor, the Lessee and the Indenture Trustee.
ARTICLE 13.
REFINANCING
Section 13.01. Refinancing
(a) Subject to the terms and conditions of this Section 13.01, the
Lessee may request the Owner Participant to participate in two refinancings in
whole but not in part, of the Equipment Notes prior to the end of the Basic Term
(a "Refinancing"). Such Refinancing may be placed in either the private or
public markets and shall be denominated in United States dollars and shall be on
terms reasonably satisfactory to the Owner Participant. The Owner Participant
will agree to negotiate promptly in good faith to conclude an agreement with the
Lessee as to the terms of any such Refinancing transaction (including the terms
of any debt to be issued in connection with such refinancing and the
documentation to be executed in connection therewith). Without the prior written
consent of the Owner Participant, the prospectus and other offering materials
relating to any Refinancing in the form of a public offering shall not identify
the Owner Participant and shall not include any financial statements of the
Owner Participant or any Affiliate thereof. In connection with any such
Refinancing in the form of a public offering, the Lessee shall indemnify the
Owner Participant in a manner satisfactory to it for any liabilities under
federal, state or foreign securities laws resulting from such offering. The
aggregate principal amount of the new Certificates issued in connection with any
Refinancing shall be the same as the aggregate principal amount outstanding on
the Equipment Notes being refinanced.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant and the Indenture Trustee shall
have received at least 15 days' prior written notice of the scheduled closing
date of such Refinancing and the Owner Participant shall have been provided such
longer period as it shall have required for a reasonable opportunity to review
the relevant documentation and the Owner Participant shall have determined in
good faith that neither it nor the Owner Trustee shall suffer any loss or
expense or bear any increased risk as a result of such Refinancing (including,
without limitation, any risk with respect to taxes or other adverse consequences
to the Owner Participant including the application of Revenue Procedures 75-21
and 75-28 and Section 467 of the Code) for
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which it has not been or will not have been indemnified by the Lessee in a
manner reasonably satisfactory to the Owner Participant.
Prior to the consummation of any Refinancing pursuant to this
Section 13.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent and setting forth Termination
Values payable pursuant to the Lease as a result of the Refinancing in
accordance with Section 3(d) of the Lease, and thereafter the amounts set forth
in such schedule shall become the amounts payable under the Lease. Upon the
consummation of the Refinancing, the evidence of indebtedness issued pursuant to
the Refinancing shall be considered "Equipment Notes" for purposes of this
Agreement and the Lease.
(c) Notwithstanding the foregoing, the Owner Participant shall have
no obligation to proceed with any Refinancing transaction as contemplated by
this Section 13.01 unless the Lessee indemnifies the Owner Trustee and the Owner
Participant by agreement in form and substance reasonably satisfactory to each
of them, for any liability, obligation (other than the obligation to pay
principal and interest in respect of the refinanced indebtedness), cost or
expense (including, without limitation, reasonable attorneys' fees and
Make-Whole Premium or other amounts due under the Indenture), including any
adverse tax consequences or impact, related to or arising out of any such
Refinancing transaction.
(d) Without the prior written consent of the Owner Participant, no
such refinancing shall (1) cause the aggregate principal amount of the
indebtedness to be substituted for the Equipment Notes to exceed the aggregate
principal amount of the then outstanding Equipment Notes, (2) cause the weighted
average life of such indebtedness to be different by more than six months than
the remaining weighted average life of the then outstanding Equipment Notes, or
(3) cause the date of maturity of such indebtedness to be later than the date of
maturity of the Equipment Notes being refinanced.
(e) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the Equipment
Notes then outstanding; provided, however, that such Refinancing shall be
subject to the satisfaction of each of the following conditions:
(i) Payment shall have been made with respect to principal, accrued
interest, Make-Whole Premium, if any, and all other sums due and owing on
the Equipment Notes payable under the Indenture;
(ii) Payment in full of all other amounts then due and owing by the
Lessee under this Agreement, the Indenture, the Lease, the Trust
Agreement, and the Equipment Notes then outstanding shall have been made
by the Lessee;
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(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to such Owner Participant, unless the Lessee shall have
agreed to provide an indemnity in respect thereof reasonably satisfactory
in form and substance to the Owner Participant), certificates and other
documents as it may reasonably request, each in form and substance
reasonably satisfactory to such party;
(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) No Specified Default shall exist or would occur immediately
after giving effect to such Refinancing;
(vi) In the event the Lessee shall not prohibit the purchase of the
Refinancing loan certificates by, or with the assets of, an employee
benefit plan, as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA or a plan or individual retirement account, which is
subject to Section 4975(c) of the Code, (individually or collectively, an
"ERISA Plan"), the Lessee will permit the placement of the Refinancing
loan certificates with an ERISA Plan only if either (A) if such placement
is in the form of pass-through certificates, the sole underwriter or the
manager or co-manager of the underwriting syndicate or the selling or
placement agent of such pass-through certificates represents to the Lessee
that it has a prohibited transaction exemption from the U.S. Department of
Labor with respect to Pass-Through certificates (such as Prohibited
Transaction Exemption 89-88 or any other comparable exemption) or (B)
purchasers of the Refinancing loan certificates (or if the Refinancing
involves the issuance and sale of pass-through certificates, purchasers of
such pass-through certificates) provide a representation (which may be in
the form of a deemed representation) regarding their source of funds used
in acquiring the Refinancing loan certificates (or such pass-through
certificates, as the case may be) and, if such purchasers represent that
they are using funds of an ERISA Plan in acquiring the Refinancing loan
certificates (or such pass-through certificates, as the case may be), such
purchasers further represent that (1) either they are relying on a
prohibited transaction exemption from the U.S. Department of Labor with
respect to their purchase and holding of the Refinancing loan certificates
(or such pass-through certificates, as the case may be) or (2) their
purchase and holding of the Refinancing loan certificates (or such
pass-through certificates, as the case may be) will not constitute a
non-exempt prohibited transaction under Section 406 of ERISA or Section
4975 of the Code. The reliance on any such exemption will not be
conditional on the Owner Participant's representation concerning its party
in interest or other status with respect to ERISA Plans; and
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(vii) The Lessee shall pay all costs and expenses (including legal
fees) incurred in connection with any proposed or actually consummated
Refinancing.
ARTICLE 14.
[RESERVED]
ARTICLE 15.
MISCELLANEOUS
Section 15.01. Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
Section 15.02. No Oral Modifications. Neither this Agreement nor any
of its terms may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to and executed by the Owner Trustee and the Indenture Trustee. A copy
of each such termination, amendment, supplement, waiver or modification shall
also be delivered to each other party to this Agreement.
The consent of each of the Pass-Through Trustee and the
Subordination Agent, in its capacity as a party to this Agreement and not as a
Holder, shall not be required to modify, amend or supplement this Agreement or
to give any consent, waiver, authorization or approval with respect to this
Agreement under the circumstances in which the consent of the Indenture Trustee
would not be required for such modification, amendment, supplement, consent,
waiver or approval in accordance with Section 6.01(b) of the Indenture, provided
that the Pass-Through Trustee shall be entitled to receive an Opinion of Counsel
(as defined in the Pass-Through Trust Agreement) necessary, in its sole
discretion, to establish that the Indenture Trustee's consent would not be
required under such circumstances.
Section 15.03. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 15.04. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Subordination Agent and its successors and
permitted assigns, including without limitation each Holder of a Certificate,
the Owner Participant and its successors and permitted assigns, the Owner
Trustee and its successors as Owner
-56-
Trustee (and any additional owner trustee appointed) under the Trust Agreement,
the Indenture Trustee and its successors as Indenture Trustee (and any
additional indenture trustee appointed) under the Indenture and the Pass-Through
Trustee and its successors as Pass-Through Trustee (and any additional
Pass-Through trustee appointed).
Section 15.05. Concerning the Owner Trustee, Indenture Trustee and
the Pass-Through Trustee. Each of Trust Company and FNBM is entering into this
Agreement solely in its capacities (except to the extent otherwise expressly
indicated), in the case of Trust Company, not in its individual capacity but
solely as Owner Trustee under the Trust Agreement, in the case of FNBM, not in
its individual capacity but solely as Indenture Trustee under the Indenture and
as Pass-Through Trustee under the Pass-Through Trust Agreement and as
Subordination Agent under the Subordination Agreement, and except as otherwise
expressly provided in this Agreement or in the Lease, the Indenture, the
Pass-Through Trust Agreement or the Trust Agreement, neither Trust Company nor
FNBM shall be personally liable for or on account of its statements,
representations, warranties, covenants or obligations under this Agreement;
provided, however, that each of Trust Company and FNBM accepts the benefits
running to it under this Agreement, and each agrees that (except as otherwise
expressly provided in this Agreement or any other Operative Agreement to which
it is a party) it shall be liable in its individual capacity for (a) its own
gross negligence or willful misconduct (whether in its capacity as trustee or in
its individual capacity), (b) any breach of representations and warranties or
any breach of covenants made in its individual capacity pursuant to or in
connection with this Agreement or the other Operative Agreements to which it is
a party, (c) any breach, in the case of the Owner Trustee, of its covenants
contained in Sections 3.05 and 3.08 of the Indenture, (d) the failure to use
ordinary care in receiving, handling and disbursing funds, (e) in the case of
the Owner Trustee, Lessor's Liens attributable to it in its individual capacity,
(f) in the case of the Indenture Trustee, Indenture Trustee's Liens, and (g)
taxes, fees or other charges on, or based on, or measured by, any fees,
commissions or compensation received by it in connection with the transactions
contemplated by the Operative Agreements.
Section 15.06. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 15.07. Certain Limitations on Reorganization. The Indenture
Trustee and the Pass-Through Trustee agree that, if (i) the Owner Trustee
becomes or all or any part of the Lessor's Estate or the trust created by the
Trust Agreement becomes the property of, a debtor subject to the reorganization
provisions of the Bankruptcy Code or any other applicable bankruptcy or
insolvency statutes, (ii) pursuant to any such reorganization provisions, the
Owner Participant is held to have recourse liability to the debtor, the Owner
Trustee or the trustee of the debtor directly
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or indirectly on account of any amount payable as Make-Whole Premium, principal
or interest on the Equipment Notes, or any other amount payable on any Equipment
Note that is provided in the Operative Agreements to be nonrecourse to the Owner
Participant and (iii) the Indenture Trustee actually receives any Recourse
Amount which reflects any payment by the Owner Participant on account of (ii)
above, then the Indenture Trustee shall promptly refund to the Owner Participant
such Recourse Amount. For purposes of this Section 15.07, "Recourse Amount"
means the amount by which the portion of such payment by the Owner Participant
on account of clause (ii) above received by the Indenture Trustee exceeds the
amount which would have been received by the Indenture Trustee if the Owner
Participant had not become subject to the recourse liability referred to in (ii)
above. Nothing contained in this Section shall prevent the Indenture Trustee
from enforcing any individual obligation (and retaining the proceeds thereof) of
the Owner Participant under this Agreement or, any other Operative Agreement to
the extent herein or therein provided, for which the Owner Participant has
expressly agreed by the terms of this Agreement to accept individual
responsibility.
Section 15.08. GOVERNING LAW. THIS AGREEMENT IS BEING DELIVERED IN
THE SATE OF NEW YORK, AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS.
Section 15.09. Section 1110 Compliance. The parties hereto agree
that the transactions contemplated by the Operative Agreements are expressly
intended to be, shall be, and should be construed so as to be entitled to the
benefits and protection of Section 1110 of the Bankruptcy Code.
Section 15.10. Reliance of Liquidity Providers. Each of the parties
hereto agrees and acknowledges that each Liquidity Provider shall be a third
party beneficiary of each of the representations and warranties made herein by
such party (and of each covenant herein made by such party to each Liquidity
Provider), and that each Liquidity Provider may rely on such representations,
warranties and covenants to the same extent as if such representations,
warranties and covenants were made to such Liquidity Provider directly. The
terms of this Agreement shall inure to the benefit of each Liquidity Provider,
their respective successors and permitted assigns.
* * *
-58-
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers as of the
day and year first written above.
MIDWAY AIRLINES CORPORATION
By: _______________________
Name:
Title:
[OWNER PARTICIPANT]
By: _______________________
Name:
Title:
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity, except as
otherwise expressly provided herein
but solely as Owner Trustee
By: _______________________
Name:
Title:
THE FIRST NATIONAL BANK OF
MARYLAND, as Indenture Trustee,
Pass-Through Trustee and
Subordination Agent
By: _______________________
Name:
Title:
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Schedule I
Commitments
Participants Amount of Commitment
------------ --------------------
[Owner Participant] ____% of Lessor's Cost
1998-A1 Pass-Through Trust ____% of Lessor's Cost
1998-B1 Pass-Through Trust ____% of Lessor's Cost
1998-C1 Pass-Through Trust ____% of Lessor's Cost
1998-D1 Pass-Through Trust ____% of Lessor's Cost
[Leased Aircraft
Definitions]
APPENDIX A
DEFINITIONS [N______]
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (as defined below), unless otherwise
defined in an Operative Agreement or the context thereof shall otherwise
require. In the case of any conflict between the provisions of this Appendix and
the provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean such agreements as amended and supplemented from time to
time, and (ii) references to parties to agreements shall be deemed to include
the successors and permitted assigns of such parties.
"Additional Insureds" means the Owner Trustee (in its individual and trust
capacities), the Owner Participant, the Indenture Trustee (in its individual and
trust capacities) and each Liquidity Provider.
"Aeronautics Authority" means as of any time of determination, the FAA or
other governmental airworthiness authority having jurisdiction over the Aircraft
or the Airframe and Engines or engines attached thereto under the laws of the
country in which the Airframe is then registered.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling 50% or more of any class of voting securities of such
Person or otherwise controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract or
otherwise.
"After Tax Basis" means a basis such that any payment to be received by a
Person shall be supplemented by a further payment to such Person so that the sum
of the two payments, after deduction of all Taxes (taking into account any
related credits or deductions) resulting from the receipt or accrual of such
payments, shall be equal to the payment to be received.
"Aircraft" means the Airframe together with the Engines, whether or not
any of the Engines may at the time of determination be installed on the Airframe
or installed on any other airframe or on any other aircraft.
"Airframe" means (i) the Canadair Regional Jet Series 200ER aircraft
(excluding the Engines and any other engines which may from time to time be
installed thereon, but including any and all Parts which may from time to time
be incorporated in, installed on or attached to such aircraft, and including any
and all such Parts removed therefrom so long as title to such removed Parts
remains vested in the Lessor under the terms of Section 7 of the Lease)
originally delivered and leased under the Lease, identified by national
registration number and manufacturer's serial number in the Lease Supplement
executed and delivered on the Delivery Date, so long as a Replacement Airframe
shall not have been substituted therefor pursuant to Section 8 of the Lease, and
(ii) a Replacement Airframe, so long as another Replacement Airframe shall not
have been substituted therefor pursuant to Section 8 of the Lease.
"Applicable Law" means all applicable laws, treaties, judgments, decrees,
injunctions, writs and orders of any court, governmental agency or authority and
rules, regulations, orders, directives, licenses and permits of any governmental
body, instrumentality, agency or authority.
"Average Life Date" means, for any Equipment Note, the date which follows
the prepayment date by a period equal to the Remaining Weighted Average Life of
such Equipment Note.
"Bankruptcy Code" means Title 11 of the United States Code, as amended,
and any successor thereto.
"Basic Rent" means the rent payable on Basic Rent Payment Dates throughout
the Basic Term for the Aircraft pursuant to Section 3(b) of the Lease and rent
payable during any Renewal Term pursuant to Section 13(a) of the Lease.
"Basic Rent Payment Date" means each date listed under the heading "Basic
Rent Payment Date" in Exhibit C to the Lease.
"Basic Term" means the period commencing at the beginning of the day on
the Delivery Date and ending at end of the day on the Expiration Date, or such
earlier date on which the Lease shall be terminated as provided therein.
"Beneficial Interest" means the interest of the Owner Participant under
the Trust Agreement.
"Business Day" means any day other than a Saturday or Sunday on which
commercial banks are not authorized or required to close in New York City,
Charlotte, North Carolina and the city in the United States in which the office
or agency is
-2-
maintained by the Pass-Through Trustee for the payment of the Pass-Through
Certificates, and after the Lien of the Indenture is discharged, Wilmington,
Delaware.
"Change in Tax Law" means any change or proposed change in the Code or the
Regulations or any change in the interpretation of the Code or Regulations or
any change in the interpretation of the Code or Regulations in a decision by the
United States Supreme Court, the United States Tax Court, the United States
Court of Claims or any one of the United States Courts of Appeals, or any
issuance of a revenue ruling, revenue procedure or any pronouncement by the
Internal Revenue Service or the Department of the Treasury.
"Citizen of the United States" means a citizen of the United States as
defined in ss. 40102(a)(15) of the Transportation Code, or any analogous part of
any successor or substituted legislation or regulation at the time in effect.
"Class A Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class B Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class C Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any similar legislation of the United States enacted to supersede,
amend, or supplement such Code (and any reference to a provision of the Code
shall refer to any successor provision(s), however designated).
"Commitment" of a Loan Participant shall have the meaning given such term
in Section 2(d) of the Participation Agreement; "Commitment" of the Owner
Participant shall have the meaning given such term in Section 2(c) of the
Participation Agreement.
"CRAF Program" has the meaning specified in Section 5(b)(vii) of the
Lease.
"DOT" means the U.S. Department of Transportation or any successor
thereto.
"Debt Rate" means the weighted average (based on Outstanding principal
amount) rate of interest on the Equipment Notes.
"Default" means any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
"Delivery Date" means the date on which the Aircraft is delivered and sold
to the Lessor and leased by the Lessor to the Lessee under the Lease, which date
shall be the date of the initial Lease Supplement.
-3-
"Deposit Agreement" means each of the four Deposit Agreements between the
Depositary and the Escrow Agent, dated as of the Issuance Date, each of which
relates to one of the Pass-Through Trusts.
"Depositary" means First Union National Bank, as Depositary under each
Deposit Agreement.
"Dollars" means dollars in lawful currency of the United States.
"Downgrade Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"EBO Date" has the meaning given to such term in Exhibit B to the Lease.
"EBO Price" has the meaning given to such term in Exhibit B to the Lease.
"Engine" means (A) one of the two CF34-3B1 Series 200 engines originally
delivered and leased under the Lease, identified by manufacturer's serial number
in the Lease Supplement executed and delivered on the Delivery Date, so long as
a Replacement Engine shall not have been substituted therefor pursuant to
Section 7(e) of the Lease, and (B) a Replacement Engine, so long as another
Replacement Engine shall not have been substituted therefor pursuant to Section
7(e) of the Lease, whether or not such engine or Replacement Engine, as the case
may be, is from time to time installed on the Airframe or installed on any other
aircraft, and including in each case all Parts incorporated or installed in or
attached thereto and any and all Parts removed therefrom so long as title to
such Parts remains vested in the Lessor under the terms of Section 7 of the
Lease. The term "Engines" means, as of any date of determination, the two
engines each of which is an Engine on that date.
"Engine Manufacturer's Consent" means any consent to the Engine Warranty
Assignment delivered by the manufacturer of the Engines on the Delivery Date and
pertaining to the Aircraft.
"Engine Warranty Assignment" means any engine warranty assignment
agreement, in form and substance reasonably acceptable to the Owner Participant
entered into by the Lessor and the Lessee on the Delivery Date.
"Equipment Notes" means the Equipment Notes issued by the Owner Trustee
pursuant to the Indenture and any equipment note issued in exchange therefor or
replacement thereof pursuant to the Indenture.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means First Union Trust Company, National Association, as
Escrow Agent under each of the Escrow Agreements.
-4-
"Escrow Agreement" means each of the four Escrow and Paying Agent
Agreements, among the Escrow Agent, the Paying Agent, certain initial purchasers
of the Pass-Through Certificates named therein and one of the Pass-Through
Trustees, dated as of the Issuance Date, each of which relates to one of the
Pass Through Trusts.
"Event of Default" has the meaning given to such term in Section 17 of the
Lease.
"Event of Loss" means any of the following events with respect to the
Aircraft, the Airframe or any Engine:
(i) theft or disappearance for a period in excess of 90 consecutive
days;
(ii) destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use for any reason whatsoever;
(iii) any event which results in an insurance settlement with
respect to such property on the basis of an actual, constructive or
compromised total loss;
(iv) condemnation, confiscation or seizure of, or requisition of
title to or use of such property by any foreign government (or in the case
of any such requisition of title, by the Government) or any agency or
instrumentality thereof, for a period in excess of 180 consecutive days
(or 30 consecutive days for the appropriation of title), or, in any of the
cases in this clause (iv), such shorter period ending on the expiration of
the Term;
(v) condemnation, confiscation or seizure of, or requisition of use
of such property by the Government for a period extending beyond the Term,
provided that no Event of Loss shall be deemed to have occurred, and the
term of the Lease shall be extended automatically for a period of six
months in the event that the Aircraft is requisitioned by the Government
pursuant to an activation under the CRAF Program; and
(vi) as a result of any law, rule, regulation, order or other action
by the Aeronautics Authority, the use of the Aircraft or Airframe in the
normal course of air transportation shall have been prohibited by virtue
of a condition affecting all Canadair Regional Jet Series 200ER aircraft
equipped with engines of the same make and model as the Engines for a
period of 180 consecutive days (or beyond the end of the Term), unless the
Lessee, prior to the expiration of such 180-day period, shall be
diligently carrying forward all necessary and desirable steps to permit
normal use of the Aircraft and shall within 12 months have conformed at
least one Canadair Regional Jet Series 200ER aircraft (but not necessarily
the Aircraft) to the requirements of any such law, rule, regulation, order
or action, and shall be diligently pursuing conformance of the Aircraft in
a non-discriminatory manner.
-5-
The date of such Event of Loss shall be (aa) the 91st day following loss of such
property or its use due to theft or disappearance (or the end of the Term if
earlier); (bb) the date of any destruction, damage beyond economic repair or
rendition of such property permanently unfit for normal use; (cc) the date of
any insurance settlement on the basis of an actual, constructive or compromised
total loss; (dd) the 181st day following condemnation, confiscation, seizure or
requisition of title to or use of such property by a foreign government referred
to in clause (iv) above (or the 31st day in the case of appropriation of title,
or the end of the Term if earlier than such 181st or 31st day); (ee) the last
day of the Term (as automatically extended by six months in the case of an
activation under the CRAF Program) in the case of requisition of title to or use
of such property by the Government; and (if) the last day of the applicable
period referred to in clause (vi) above (or if earlier, the end of the Term
without the Lessee's having conformed at least one Canadair Regional Jet Series
200ER aircraft to the applicable requirements). An Event of Loss with respect to
the Aircraft shall be deemed to have occurred if any Event of Loss occurs with
respect to the Airframe.
"Excepted Payments" means collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of the
Owner Participant, the Owner Trustee in its individual capacity or any of their
respective successors, permitted assigns, directors, officers, employees,
servants and agents or Affiliates, pursuant to the Participation Agreement or
any other Operative Agreement or any indemnity hereafter granted to the Owner
Participant or the Owner Trustee in its individual capacity pursuant to the
Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the Aircraft
payable as a result of insurance claims paid for the benefit of, or losses
suffered by, the Owner Trustee or the Indenture Trustee in their respective
individual capacities or by the Owner Participant, or their respective
successors, permitted assigns or Affiliates, (iii) proceeds of insurance
maintained with respect to the Aircraft by the Owner Participant or any
Affiliate thereof (whether directly or through the Owner Trustee) in accordance
with Section 9(f) of the Lease, (iv) payments by the Lessee in respect of any
amounts payable under the Tax Indemnity Agreement, (v) any purchase price paid
to the Owner Participant for its interest in the Trust Estate, (vi) subject to
Section 3(f) of the Lease, payments constituting increases in Basic Rent
attributable to payments arising pursuant to the Tax Indemnity Agreement, (vii)
any payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above, (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described in
clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
"Expenses" has the meaning given to such term in Section 7.01(a) of the
Participation Agreement.
"Expiration Date" means the date specified as such in the Lease Supplement
executed and delivered on the Delivery Date.
-6-
"FAA Xxxx of Sale" means the xxxx of sale for the Airframe on AC Form
8050-2, or such other form as may be approved by the Aeronautics Authority,
executed in favor of the Owner Trustee and to be dated the Delivery Date.
"Fair Market Rental Value" or "Fair Market Sales Value" of the Airframe or
any Engine shall mean the value that would be obtained in an arms'-length
transaction between an informed and willing lessee-user or buyer-user (other
than a lessee currently in possession or a used equipment dealer) under no
compulsion to lease or buy, as the case may be, and an informed and willing
lessor or seller, as the case may be, under no compulsion to lease or sell, as
the same shall be specified by agreement between the Lessor and the Lessee or,
if not agreed to by the Lessor and the Lessee within a period of 15 days after
either party requests a determination, then as specified in an appraisal
prepared and delivered in New York City mutually agreed to by two recognized
independent aircraft appraisers, one of which shall be appointed by the Lessor
and the other of which shall be appointed by the Lessee, or, if such appraisers
cannot agree on such appraisal, an appraisal arrived at by a third independent
recognized appraiser chosen by the mutual consent of the two aircraft
appraisers. If either party should fail to appoint an appraiser within 15 days
of receiving notice of the appointment of an appraiser by the other party, then
such appraisal shall be made by the appraiser appointed by the first party. If
the two appraisers cannot agree on such appraisal and fail to appoint a third
independent recognized aircraft appraiser within 15 days after the appointment
of the second appraiser, then either party may apply to the American Arbitration
Association to make such appointment. The appraisal shall be completed within 30
days of the appointment of the last appraiser appointed. In determining Fair
Market Rental Value or Fair Market Sales Value by appraisal or otherwise, it
will be assumed that the Aircraft, Airframe or Engine is in the condition,
location and overhaul status in which it is required to be returned to the
Lessor pursuant to Section 12 of the Lease (except that a determination of Fair
Market Sales Value pursuant to Section 17 of the Lease shall be based on "as is,
where is" condition), that the Lessee has removed all Parts which it is entitled
to remove pursuant to Section 7 of the Lease and that the Aircraft is encumbered
by the Lease. For purposes of the preceding sentence and with respect to a
purchase of the Aircraft pursuant to Section 13(b) of the Lease, "encumbered by
the Lease" shall mean, with respect to Fair Market Sales Value, the Fair Market
Sales Value increased or decreased to reflect the benefits and burdens of the
Lease and other Operative Documents. Except as otherwise expressly provided in
the Lease, all appraisal costs will be shared equally by the Lessor and the
Lessee.
"Federal Aviation Administration" or "FAA" means the United States Federal
Aviation Administration and any successor agency or agencies thereto.
"Final Drawing" has the meaning given to such term in Section 1.01 of the
Intercreditor Agreement.
"Fixed Renewal Term" has the meaning given to such term in Section 13(a)
of the Lease.
-7-
"FNBM" means The First National Bank of Maryland, a national banking
association.
"Government means the United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
"Holder" means, as of any particular time, the Person in whose name a
Equipment Note shall be registered.
"Indemnitee" means each of Trust Company, in its individual capacity and
as Owner Trustee, the Subordination Agent, in its individual capacity and in its
capacity as Subordination Agent, each Liquidity Provider, the Owner Participant,
the Indenture Trustee, in its individual capacity and as trustee, the Escrow
Agent, the Paying Agent, the Pass Through Trustees and each Affiliate, officer,
director, employee, agent and servant of any of the foregoing Persons. No holder
of a Pass-Through Certificate shall be deemed to be an Indemnitee.
"Indenture" means the Trust Indenture and Security Agreement [N_______],
dated as of ______________ __, 199_, between the Owner Trustee and the Indenture
Trustee.
"Indenture Default" means any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
"Indenture Documents" has the meaning specified in the Granting Clause of
the Indenture.
"Indenture Event of Default" means each of the events specified in Section
7.01 of the Indenture.
"Indenture Indemnitee" means (i) the Indenture Trustee and each separate
or additional trustee appointed pursuant to the Indenture, (ii) the Escrow
Agent, (iii) the Subordination Agent, (iv) each Liquidity Provider, (v) the
Paying Agent, (vi) each Pass-Through Trustee and (vii) each of the respective
directors, officers, employees, agents and servants of each of the persons
described in clauses (i) through (vi).
"Indenture Supplement" means (a) the Trust Indenture and Security
Agreement Supplement No. 1, substantially in the form of Exhibit A to the
Indenture, which shall describe with particularity the Aircraft included in the
property of the Owner Trustee covered by the Indenture by reference to the Lease
Supplement, and which creates a first priority security interest in the Aircraft
and (b) any other supplement to the Indenture from time to time executed and
delivered.
"Indenture Trustee" means The First National Bank of Maryland, a national
banking association, as indenture trustee under the Operative Documents.
-8-
"Indenture Trustee's Liens" means any Lien against, on or with respect to
the Aircraft, any Engine, the Lessor's Estate or the Trust Indenture Estate or
any part thereof resulting from (i) claims against the Indenture Trustee not
related to the administration of the Trust Indenture Estate or any transactions
pursuant to the Indenture or any document included in the Trust Indenture
Estate, (ii) any act or omission of the Indenture Trustee which is not related
to the transactions contemplated by the Operative Agreements or is in violation
of any of the terms of the Operative Agreements, or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the Lessee
has not indemnified (and is not obligated to indemnify) the Indenture Trustee in
such capacity.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Lessee that is independent in
fact, does not have any direct financial interests, or any material indirect
financial interest, in the Lessee or any Affiliate of the Lessee, and is not
connected with the Lessee or any Affiliate of the Lessee, as an officer,
employee, promoter, underwriter, trustee, partner, director or Person performing
similar functions; provided, that if the Indenture Trustee shall not have
received written notice of such an appointment at least 10 days prior to the
Prepayment Date, "Independent Investment Banker" shall mean such an institution
appointed by the Indenture Trustee.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
August 13, 1998, among the Pass Through Trustees, the Class A Liquidity
Provider, the Class B Liquidity Provider, the Class C Liquidity Provider and the
Subordination Agent.
"Interest Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Issuance Date" means August 13, 1998.
"Lease" means the Lease Agreement [N______], dated as of ______ _____,
199_ between the Owner Trustee and the Lessee.
"Lease Supplement" means any Lease Supplement, substantially in the form
of Exhibit A to the Lease, entered into between the Lessor and the Lessee for
the purpose of leasing the Aircraft under and pursuant to the terms of the
Lease, including any amendment thereto entered into subsequent to the Delivery
Date.
"Lessee" means Midway Airlines Corporation, a Delaware corporation.
"Lessee Documents" means (x) the Operative Agreements to which the Lessee
is a party and (y) the Pass-Through Trust Agreements.
"Lessor" means First Union Trust Company, National Association, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement.
-9-
"Lessor's Cost" has the meaning given to such term in Exhibit B of the
Lease.
"Lessor's Estate" means all estate, right, title and interest of the Owner
Trustee in and to the Aircraft, and Engines and the Operative Agreements (other
than the Tax Indemnity Agreement) including, without limitation, all amounts of
Rent, insurance proceeds and requisition, indemnity or other payments of any
kind, but specifically excluding any Excepted Payments.
"Lessor's Liens" means Liens against, on or with respect to the Aircraft,
any Engine, the Lessor's Estate or the Trust Indenture Estate or any part
thereof, title thereto or any interest therein arising as a result of (i) claims
against or affecting the Lessor, in its individual capacity or as Owner Trustee,
or the Owner Participant, in each case not related to the Operative Agreements
or the transactions contemplated thereby, (ii) acts or omissions of the Lessor
in its individual capacity or as Owner Trustee, or of the Owner Participant not
contemplated or permitted under the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to Articles 6 or 7 of the Participation Agreement and which are not
required to be indemnified against by the Lessee pursuant to the Tax Indemnity
Agreement, or (iv) claims against the Lessor, in its individual capacity or as
Owner Trustee, or the Owner Participant arising from the transfer by the Lessor
or the Owner Participant of its interests in the Aircraft or any Engine other
than a transfer of the Aircraft pursuant to Section 5(b), 7(e), 13(b), 14(a) or
17 of the Lease and other than a transfer pursuant to the exercise of the
remedies set forth in Section 17 of the Lease.
"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
security interest, claim, or other similar interest of any nature whatsoever.
"Liquidity Facility" means each of the three Irrevocable Revolving Credit
Agreements (consisting of a separate Revolving Credit Agreement with the
Liquidity Provider with respect to each Pass-Through Trust) between the
Subordination Agent, as borrower, and the Liquidity Provider, each dated as of
the Issuance Date.
"Liquidity Provider" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Loan Participant" means and includes each registered holder from time to
time of an Equipment Note issued under the Indenture including, so long as it
holds any Equipment Notes issued under the Indenture, the Pass-Through Trustee
under each Pass-Through Trust Agreement.
"Majority in Interest of Holders" means, as of a particular date of
determination, the Holders of more than 50% of the aggregate unpaid principal
amount of all Equipment Notes Outstanding as of such date.
-10-
"Make-Whole Premium" means with respect to any Equipment Note, an amount
determined as of the day before the applicable Prepayment Date (or date of
purchase, as the case may be) which an Independent Investment Banker determines
to be equal to the excess, if any, of (i) the present value of the remaining
scheduled payments of such principal amount or portion thereof and interest
thereon to the maturity date of such Equipment Note assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield (in the case of the Series A Equipment Notes and Series B Equipment Notes)
and the Treasury Yield plus .50% (in the case of the Series C Equipment Notes
and the Series D Equipment Notes) over (ii) the outstanding principal amount of
such Equipment Note plus accrued interest (other than any overdue portion
thereof).
"Manufacturer" means Bombardier, Inc., a Canadian corporation.
"Minimum Liability Amount" has the meaning given to such term in Exhibit B
to the Lease.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Non-U.S. Person" means any Person other than a U.S. Person.
"Note Purchase Agreement" means the Note Purchase Agreement, dated as of
the Issuance Date, among the Lessee, the Subordination Agent, the Escrow Agent,
the Paying Agent and the Pass-Through Trustee under each Pass-Through Trust
Agreement providing for, among other things, the issuance and sale of certain
equipment notes.
"Offering Memo" means the Lessee's August 6, 1998 Offering Memorandum
concerning the Pass-Through Certificates.
"Officer's Certificate" means, when delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner Trustee,
as the case may be, and delivered to the Indenture Trustee. Each such
certificate shall include the statements provided for in Section 15.07 of the
Indenture.
"Operative Agreements" means the Participation Agreement, the Trust
Agreement, the FAA Xxxx of Sale, the Warranty Xxxx of Sale, the Purchase
Agreement, the Purchase Agreement Assignment, the Engine Warranty Assignment,
the PAA Consent, the Lease, each Lease Supplement, any Owner Participant
Guaranty, the Equipment Notes outstanding at the time of reference, the
Indenture, each Indenture Supplement and the Tax Indemnity Agreement.
"Opinion of Counsel" means when delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the Lessee
may be (i) an attorney employed by the Lessee who is generally empowered to
deliver such written opinions, (ii) Fulbright & Xxxxxxxx L.L.P., or (iii) other
counsel designated by the
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Lessee and reasonably satisfactory to the Indenture Trustee, and (b) for the
Owner Trustee or the Indenture Trustee, an attorney selected by such Person and
reasonably satisfactory to the Lessee and, in the case of the Owner Trustee,
reasonably satisfactory to the Indenture Trustee.
"Outstanding" means, when used with respect to Equipment Notes, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Equipment Notes theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Equipment Notes theretofore canceled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Equipment Notes for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee in
trust for the Holders of such Equipment Notes pursuant to Section
14.01 of the Indenture; provided that if such Equipment Notes are to
be prepaid, notice of such prepayment has been duly given pursuant
to the Indenture or provision therefor satisfactory to the Indenture
Trustee has been made; and
(iii) Equipment Notes in exchange for or in lieu of which other
Equipment Notes have been executed and delivered pursuant to Article
II of the Indenture.
"Owner Participant" means _________________, a _________________.
"Owner Participant Guarantor" means the provider of an Owner Participant
Guaranty.
"Owner Participant Guaranty" means any guaranty delivered to support the
obligations of the Owner Participation under the Operative Agreements in
connection with the transfer by the Owner Participant of the Beneficial
Interest.
"Owner Trustee" means Trust Company, not in its individual capacity except
as otherwise expressly stated, but solely as trustee under the Trust Agreement.
"PAA Consent" means any consent to the Purchase Agreement Assignment
delivered by the Manufacturer on the Delivery Date and pertaining to the
Aircraft.
"Participants" means, collectively, the Owner Participant and the
Pass-Through Trustee with respect to each of the Pass-Through Trust Agreements;
"Participant" means, individually, one of the Participants.
-12-
"Participation Agreement" the Participation Agreement [N________], dated
as of __________ __, 199_, among the Lessee, the Owner Trustee not in its
individual capacity except as otherwise expressly provided therein, but solely
as owner trustee, the Owner Participant, the Indenture Trustee, the Pass-Through
Trustees and the Subordination Agent.
"Parts" means any and all appliances, parts, instruments, appurtenances,
accessories, furnishings, seats, and other equipment of whatever nature (other
than Engines or engines and temporary replacement parts as provided in Section 8
of the Lease and cargo containers) which may from time to time be incorporated
or installed in or attached to any Airframe or any Engine, exclusive of any
items leased by the Lessee from third parties and not required in the navigation
of the Aircraft.
"Pass-Through Certificates" means any of the Pass-Through Certificates,
1998-1A, the Pass-Through Certificates, 1998-1B, the Pass-Through Certificates,
1998-1C or the Pass Through Certificates, 1998-1D, in each case as issued by the
related Pass-Through Trust; and "Pass-Through Certificates" means all of such
Pass-Through Certificates.
"Pass-Through Documents" means the Pass-Through Trust Agreements, the
Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement and
the Liquidity Facilities.
"Pass-Through Trust" means the Midway Airlines 1998-1 Pass-Through Trust
Class A, Midway Airlines 1998-1 Pass-Through Trust Class B, Midway Airlines
1998-1 Pass-Through Trust Class C and Midway Airlines 1998-1 Pass-Through
Trust-Class D, in each case formed pursuant to the related Series Supplement in
accordance with the Pass-Through Trust Agreement; and "Pass-Through Trusts"
means all of such Pass-Through Trusts.
"Pass-Through Trust Agreement" means each of the four Pass-Through Trust
Agreements dated as of August 13, 1998 among the Lessee and the Pass-Through
Trustee (which shall include each Successor Pass-Through Trust Agreement entered
into pursuant to Section 11.01 of each thereof).
"Pass-Through Trustee" The First National Bank of Maryland, a national
banking association, in its capacity as Pass-Through Trustee under each
Pass-Through Trust Agreement.
"Past Due Rate" means in respect of any principal of or interest on or any
other amounts payable in respect of any Equipment Note that is not paid when due
to any Holder, a rate per annum during the period from and including the due
date to but excluding the date on which such amount is paid in full equal to 1%
plus the interest rate applicable to such Equipment Note.
-13-
"Payment Date" means each January 2 and July 2, commencing on _________ 2,
199_.
"Permitted Air Carrier" means (a) any Section 1110 Person and (b) any
foreign air carrier that is principally based in any foreign country listed on
Exhibit E to the Lease, except those that do not maintain normal diplomatic
relations with the United States.
"Permitted Investments" means (a) direct obligations of the United States
of America or any agency or instrumentality thereof, (b) obligations fully
guaranteed by the United States of America or any agency or instrumentality
thereof, (c) any mutual fund the portfolio of which is limited to obligations of
the type described in clauses (a) and (b), including any proprietary mutual fund
of The First National Bank of Maryland for which such bank or an affiliate is
investment advisor or to which such bank provides other services and receives
reasonable compensation for such services, (d) certificates of deposit issued
by, or bankers' acceptances of, or time deposits or a deposit account with, any
bank, trust company, or national banking association incorporated or doing
business under the laws of the United States of America or one of the states
thereof, having a combined capital and surplus of at least $100,000,000 and
having a rating of "A" or better from the Xxxxx Bank Watch Service, (e)
commercial paper issued by companies in the United States which directly issue
their own commercial paper and which are doing business under the laws of the
United States of America or one of the states thereof and in each case having a
rating assigned to such commercial paper by a nationally recognized rating
organization in the United States of America equal to the highest rating
assigned by such organization, or (f) obligations of the type described in
clauses (a), (b), (d), or (e) above, purchased from any bank, trust company, or
banking association referred to in clause (d) above pursuant to repurchase
agreements obligating such bank, trust company, or banking association to
repurchase any such obligation not later than 30 days after the purchase of any
such obligation. Unless otherwise specified in writing by the Owner Trustee, all
such Permitted Investments shall mature not later than 30 days from the date of
purchase.
"Permitted Lien" has the meaning given to such term in Section 10 of the
Lease.
"Permitted Sublessee" means (a) any Permitted Air Carrier or (b) any
airframe or engine manufacturer, or Affiliate of such a manufacturer, who is
domiciled in the United States of America or a country listed on Exhibit E to
the Lease.
"Person" means any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
"Placement Agents" means Xxxxxx Xxxxxxx & Co. Incorporated and Credit
Suisse First Boston.
-14-
"Placement Agreement" means the Purchase Agreement dated August 6, 1998
among the Lessee and the Placement Agents.
"Prepayment Date" has the meaning given to such term in Section 6.02(b) of
the Indenture.
"Prepayment Price" has the meaning given to such term in Section 6.02(b)
of the Indenture.
"Purchase Agreement" means Bombardier Regional Aircraft Division Purchase
Agreement No. PA-0393 dated September 17, 1997, as amended, between the Company
and the Manufacturer (including all exhibits thereto, together with all letter
agreements entered into that by their terms constitute part of any such Purchase
Agreement).
"Purchase Agreement Assignment" means the Purchase Agreement and Engine
Warranties Assignment [N ____], dated as of even date with the Participation
Agreement, between Lessee and Owner Trustee.
"Purchase Price" means an amount equal to Lessor's Cost.
"Rating Agency" means Moody's or S&P, as the context requires.
"Record Date" means, with respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 15 for January 2
Payment Dates and June 15 for July 2 Payment Dates, whether or not such date is
a Business Day.
"Recourse Amount" has the meaning given to such term in Section 15.07 of
the Participation Agreement.
"Refinancing" means a non-recourse loan to the Lessor arranged pursuant to
Section 13.01 of the Participation Agreement.
"Register" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registrar" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registration Rights Agreement" means the Exchange and Registration Rights
Agreement, dated as of August 13, 1998, among the Placement Agents, FNBM, as
Pass-Through Trustee, and the Lessee.
"Registration Rights Event" has the meaning given to such term in the
Registration Rights Agreement.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and supplemented
and in effect from time to time.
-15-
"Remaining Weighted Average Life" means on a given date with respect to
any Equipment Note the number of days equal to the quotient obtained by dividing
(i) the sum of each of the products obtained by multiplying (a) the amount of
each then remaining scheduled payment of principal of such Equipment Note by (b)
the number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Equipment Note.
"Renewal Term" has the meaning given to such term in Section 13(a) of the
Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Rent Payment Date" means each Payment Date during the Term.
"Replacement Aircraft" means any Aircraft of which a Replacement Airframe
is part.
"Replacement Airframe" means a Canadair Regional Jet Series 200ER series
aircraft or a comparable or improved model of such aircraft of the Manufacturer
(except Engines or engines from time to time installed thereon) which shall have
become subject to the Lease pursuant to Section 8 thereof.
"Replacement Closing Date" has the meaning given such term in Section 8(d)
of the Lease.
"Replacement Engine" means a CF34-3B1 Series 200 engine (or engine of the
same or another manufacturer of a comparable or an improved model and suitable
for installation and use on the Airframe), and which shall have become subject
to the Lease pursuant to Section 7(e) thereof.
"Responsible Officer" means, with respect to the Owner Trustee or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate officer
of a party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant, agreement
or obligation of such party pursuant to any Operative Agreement, would have
responsibility for and knowledge of such matter and the requirements of any
Operative Agreement with respect thereto.
"S&P" means Standard & Poor's Ratings Group.
"SEC" means the Securities and Exchange Commission of the United States
and any successor agencies or authorities.
-16-
"Section 1110 Person" means a Citizen of the United States who is an
air carrier holding a valid air carrier operating certificate issued pursuant
to 49 U.S.C. ch. 447 for aircraft capable of carrying 10 or more individuals.
"Secured Obligations" has the meaning specified in the Granting Clause of
the Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Series "A" or "Series A Equipment Notes" means the Equipment Notes issued
and designated as "Series A" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series A".
"Series "B" or "Series B Equipment Notes" means the Equipment Notes issued
and designated as "Series B" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series B".
"Series "C" or "Series C Equipment Notes" means the Equipment Notes issued
and designated as "Series C" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series C".
"Series "D" or "Series D Equipment Notes" means the Equipment Notes issued
and designated as "Series D" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series D".
"Specified Default" means (a) an event or condition described in Section
16(a), (f), (g) or (h) of the Lease that, after the giving of notice or lapse of
time, or both, would mature into an Event of Default, or (b) any Event of
Default.
"Specified Investments" means (a) direct obligations of the United States
of America or obligations fully guaranteed by the United States of America; (b)
any mutual fund the portfolio of which is limited to obligations of the type
described in clause (a), including any proprietary mutual fund of The First
National Bank of Maryland for which such bank or an affiliate is investment
advisor or to which such bank provides other services and receives reasonable
compensation for such services; (c) commercial paper rated A-1/P-1 by S&P and
Moody's, respectively or, if such ratings are unavailable, rated by any
nationally recognized rating organization in the United States equal to the
highest rating assigned by such rating organization; (d) investments in
negotiable certificates of deposit, time deposits, banker's acceptances,
commercial paper or other direct obligations of, or obligations guaranteed by,
commercial banks organized under the laws of the United States or of any
political subdivision thereof (or any U.S. branch of a foreign bank) with issuer
ratings of at least B/C by Thomson
-17-
Bankwatch, having maturities no later than 90 days following the date of such
investment; (e) overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers; or (f) overnight repurchase
agreements with respect to the securities described in clause (a) above entered
into with an office of a bank or trust company which is located in the United
States of America or any bank or trust company which is organized under the laws
of the United States or any state thereof and has capital, surplus and undivided
profits aggregating at least $500 million.
"Sublease" means any sublease agreement between the Lessee and a Permitted
Sublessee as permitted by Section 5(b) of the Lease.
"Subordination Agent" means The First National Bank of Maryland, a
national banking association, in its capacity as Subordination Agent.
"Subsequent Renewal Term" has the meaning given to such term in Section
13(a) of the Lease.
"Supplemental Rent" means (a) all amounts, liabilities and obligations
which the Lessee assumes or agrees to perform or pay under the Lease or under
the Participation Agreement or Tax Indemnity Agreement or any other Operative
Agreement to the Lessor, the Owner Participant, the Indenture Trustee, the
Subordination Agent, any Liquidity Provider or others, including payments of
Termination Value, EBO Price, and amounts calculated by reference to Termination
Value, any amounts of Make-Whole Premium payable under the Indenture to the
extent provided in Section 3(c) of the Lease, and all amounts required to be
paid by Lessee under the agreements, covenants, and indemnities contained in the
Lease or in the Participation Agreement or the Tax Indemnity Agreement or any
other Operative Agreement, but excluding Basic Rent, and (b) all amounts that
the Owner Trustee is obligated to pay in accordance with clause (b) of the last
paragraph of Section 2.04 of the Indenture.
"Tax" or "Taxes" has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
"Tax Indemnitee" means each of Trust Company, individually and as Owner
Trustee, the Owner Participant and the Indenture Trustee.
"Tax Indemnity Agreement" the Tax Indemnity Agreement to be entered into
by the Lessee and the Owner Participant on the Delivery Date.
"Term" has the meaning given to such term in Section 3(a) of the Lease.
"Termination Date" means each date listed in the column entitled
"Termination Date" in Exhibit D to the Lease.
-18-
"Termination Value" means (a) as of any Termination Date during the Basic
Term, the amount determined as set forth in Exhibit C to the Lease for that
Termination Date, and (b) during any Renewal Term, the amount for the date
involved, determined in accordance with Section 13(a) of the Lease, in either
case adjusted as required by Section 3(d) of the Lease.
"Transaction Costs" means those costs and expenses set forth in Section
8.01(a) of the Participation Agreement to be borne by the Owner Participant.
"Transportation Code" means Title 49 of the United States Code, subtitle
VII, as amended and in effect on the date of the Lease or as subsequently
amended, or any successor or substituted legislation at the time in effect and
applicable, and the regulations promulgated pursuant thereto.
"Treasury Yield" means, at the time of determination with respect to any
Equipment Note, the interest rate (expressed as a semi-annual equivalent and as
a decimal and, in the case of United States Treasury bills, converted to a bond
equivalent yield) determined to be the per annum rate equal to the semi-annual
yield to maturity for United States Treasury securities maturing on the Average
Life Date on such Equipment Note and trading in the public securities markets
either as determined by interpolation between the most recent weekly average
yield to maturity for two series of United States Treasury securities, trading
in public securities markets, (i) one maturing as close as possible to, but
earlier than, the Average Life Date of such Certificate and (ii) the other
maturing as close as possible to, but later than, the Average Life Date of such
Equipment Note, in each case as published in the most recent H. 15(519) or, if a
weekly average yield to maturity for United States Treasury securities maturing
on the Average Life Date of such Equipment Note is reported on the most recent
H. 15(519), such weekly average yield to maturity as published in such
H.15(519). "H.15(519)" means the weekly statistical release designated as such,
or any successor publication, published by the Board of Governors of the Federal
Reserve System. The date of determination of a Make-Whole Premium will be the
third Business Day prior to the applicable prepayment date and the "most recent
H.15(519)" means the H. 15(519) published prior to the close of business on the
third Business Day prior to the applicable prepayment date.
"Trust Agreement" means the Trust Agreement [N____] dated as of _________
__, between the Owner Participant and Trust Company.
"Trust Company" means First Union Trust Company, National Association.
"Trust Estate" means the Lessor's Estate.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
-00-
"Xxxxx Xxxxxxxxx Xxxxxx" means all estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interest, and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of the
Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee
or the Owner Participant pursuant to the Indenture.
"United States", "U.S." or "US" means the United States of America.
"U.S. Person" means a Person described in ss. 7701(a)(30) of the Code.
"Warranty Xxxx of Sale" means the full warranty xxxx of sale covering the
Aircraft (and specifically referring to each Engine) executed by the owner of
the Aircraft in favor of the Owner Trustee and to be dated the Delivery Date.
-20-
Exhibit A-1(a) to
Leased Aircraft
Participation Agreement
[Midway Leased Aircraft Opinion]
[SUBJECT TO REVIEW BY MIDWAY GENERAL COUNSEL]
[Delivery Date]
To Each of the Parties Named
on the Attached Schedule
Re: Leveraged Lease Financing of One Canadair Regional
Jet Series 200ER Aircraft Bearing U.S. Registration No. N
Ladies and Gentlemen:
I am General Counsel for Midway Airlines Corporation, a Delaware
corporation (the "Lessee"), and have acted as counsel for the Lessee in
connection with the transactions contemplated by the Participation Agreement
dated as of _________ ____, 199__, between the Lessee; Xxxx Atlantic Credit
Corporation, as Owner Participant; First Union Trust Company, National
Association, as Owner Trustee; and The First National Bank of Maryland, as
Indenture Trustee, Pass Through Trustee and Subordination Agent.
This opinion is being delivered pursuant to Section 3.01(b)(xviii)(A)(I)
of the Participation Agreement. Capitalized terms not defined herein are used as
defined in the Participation Agreement.
In connection with the opinions expressed below, I, or counsel under my
supervision in the office of the General Counsel of the Lessee, have examined
the Participation Agreement, the Purchase Agreement Assignment, the Lease, the
Lease Supplement covering the Aircraft and the Tax Indemnity Agreement (the
"Lessee's Agreements"). In addition we have reviewed the Indenture and the other
Operative Documents. In arriving at the opinions expressed below, I have assumed
(except as to the Lessee) the genuineness of all signatures and the due
authorization, execution and delivery by the parties thereto of the Lessee's
Agreements and that each such party has full power and authority to perform its
obligations thereunder. I have examined and relied without independent
verification on the representations and warranties by parties other than the
Lessee as to factual matters contained in or made pursuant to
the Lessee's Agreements. In addition, I have examined originals or copies
certified to my satisfaction, of such other agreements, documents, certificates
and statements of government officials and other papers as I have deemed
necessary or advisable as a basis for such opinions.
Based upon the foregoing, I am of the opinion that:
1. The Lessee is a corporation duly organized and validly existing in good
standing under the laws of the State of Delaware and has the corporate power and
authority to own or hold under lease its properties and conduct its business as
presently conducted and to enter into and perform its obligations under the
Lessee's Agreements. The Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Section 41102(a) of the
Transportation Code and a "citizen of the United States" within the meaning of
Section 40102(a)(15) of the Transportation Code holding an "air carrier
operating certificate" issued under Chapter 447 of the Transportation Code for
aircraft capable of carrying ten or more individuals or 6,000 pounds or more of
cargo, and each such certificate is in full force and effect. The Lessee is duly
qualified to do business as a foreign corporation and in good standing in each
jurisdiction where the activities of the Lessee require such qualification
except where the failure to so qualify would not have a material adverse effect
on the Lessee or the ability of the Lessee to perform its obligations under the
Lessee's Agreements. The Lessee's chief executive office (as such term is
defined in the Uniform Commercial Code as in effect in the State of North
Carolina) is at 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx Xxxxxxxx
00000.
2. The execution, delivery and performance by the Lessee of the Lessee's
Agreements do not require the approval or consent of, or the giving of notice
to, any trustee, stockholders or holders of any indebtedness or obligations of
the Lessee (except for such consents or approvals as have been obtained on or
prior to the Delivery Date), and neither the execution and delivery by the
Lessee thereof nor the performance by the Lessee of the transactions
contemplated thereby nor compliance by the Lessee with any of the terms and
provisions thereof will contravene any applicable law of the State of Delaware
or the United States of America applicable to or binding upon the Lessee (other
than the securities or Blue Sky laws of the various states, as to which I
express no opinion), or any of its properties, or contravene or result in any
breach of, or constitute any default under or result in the creation of any Lien
(other than as permitted under the Operative Documents) upon any property of the
Lessee under any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract bank loan or credit agreement, corporate charter,
by-law or other agreement, or instrument to which the Lessee is a party or by
which the Lessee or any of its property may be bound or affected (except for
such conflicts, breaches or defaults or liens, charges or encumbrances, that,
singly or in the aggregate, would not have material adverse effect on the
Lessee's ability to perform its obligations under the Lessee's Agreements).
-2-
3. The execution, delivery and performance of the Lessee's Agreements have
been duly authorized by all necessary corporate action on the part of the
Lessee, and the Lessee's Agreements have been duly executed and delivered by the
Lessee.
4. Except for the filings of the Uniform Commercial Code financing
statements on the Delivery Date, the execution and delivery by the Lessee of the
Lessee's Agreements and the consummation by the Lessee of the transactions
contemplated thereby do not require the consent or approval of, or the giving of
notice to, or the registration, recording or filing of any document with, or the
taking of any other action with respect to any authority or agency of the State
of North Carolina.(*)
5. The Uniform Commercial Code financing statements referred to in Section
___ of the Participation Agreement have been filed with the Office of the
Secretary of State of North Carolina.(*)
6. There are no pending or, to our knowledge, threatened actions, suits,
or proceedings before any court or administrative agency or arbitration against
the Lessee or involving the Lessee that question the validity of any of the
Lessee's Agreements or that is required to have been disclosed in the Lessee's
Annual Report on Form 10-K filed for the year ended ________________,or any
subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K, except
such as are therein disclosed.
No opinion is expressed herein as to state securities laws or other laws
other than the General Corporation Law of the State of Delaware [, the laws of
the State of North Carolina](*)e and the federal laws of the United States.
This opinion is furnished by me as counsel to the Lessee to you as parties
to the Participation Agreement and is solely for your benefit.
Very truly yours,
----------
(*) The opinions in paragraphs 4 and 5 will be delivered by a North Carolina
law firm in a legal opinion subject to customary qualifications.
Schedule of Addresses
[Owner Participant]
First Union Trust Company, National Association,
individually and as Owner Trustee
The First National Bank of Maryland,
as Indenture Trustee, Pass Through
Trustee and Subordination Agent
ABN AMRO Bank N.V.
Standard & Poor's Rating Services
Exhibit A-1(b) to
Leased Aircraft
Participation Agreement
[LETTERHEAD OF XXXXXXX XXXXXXXXX XXXXXXX & XXXXXXX, L.L.P.]
[Date]
To Each of the Parties Named
on the Attached Schedule
Re: Midway Airlines Corporation Participation Agreement N[__]
Ladies and Gentlemen:
We have acted as special North Carolina counsel to Midway Airlines
Corporation, a Delaware corporation (the "Company"), in connection with the
transactions contemplated by the Participation Agreement, dated as of
[___________ __, ___] (the "Participation Agreement"), among the Company and The
First National Bank of Maryland, as Indenture Trustee, Pass Through Trustee and
Subordination Agent, and the other parties named therein. This opinion is being
delivered pursuant to Section 3.01(b)(xviii)(A)(II) of the Participation
Agreement. Capitalized terms not defined herein are used as defined in the
Participation Agreement.
In connection with the opinion expressed below, we have examined
originals, or copies certified to our satisfaction, of the Participation
Agreement, the Trust Agreements and the Pass Through Trust Agreements (the
"Agreements"). In addition, we have reviewed originals, or copied certified to
our satisfaction, of the Indenture and the other Operative Documents executed
and delivered on the date hereof. In arriving at the opinion expressed below, we
have assumed the genuineness of all signatures and the due authorization,
execution and delivery by the parties thereto of the Agreements and that each
such party has the full power and authority to perform its obligations
thereunder. We have examined and relied without independent verification on the
representations and warranties by the parties as to factual matters contained in
or made pursuant to the Agreements. In addition, we have examined originals, or
copies certified to our satisfaction, of such other agreements, documents,
certificates and statements of government officials and other papers as we have
deemed necessary or advisable as a basis for such opinion.
With your permission, we have made the following factual assumptions for
purposes of this opinion:
To Each of the Parties Named on the Attached Schedule
[date]
Page 2
1. The Company is in compliance with all federal and state laws and
regulations (other than the laws and regulations of the State of
North Carolina) relating to the execution and delivery by the
Company of the Documents and the consumption by the Company of the
transactions contemplated thereby.
2. Prior to the date hereof, the Company has been in compliance with
all North Carolina laws and regulations governing its operations.
Based upon the foregoing and subject to the qualifications set forth
below, we are of the opinion that (a) the Uniform Commercial Code financing
statements required to be filed in North Carolina on the Delivery Date pursuant
to Section 3.01(m) of the Participation Agreements have been duly filed and (b)
the execution and delivery by the Company of the Documents and the consummation
by the Company of the transactions contemplated thereby do not require the
consent or approval of, or the giving of notice to, or the registration,
recording or filing of any document with, or the taking of any other action with
respect to any authority or agency of the State of North Carolina.
The opinion expressed herein is limited to matters governed by the laws of
the State of North Carolina. You have not requested any opinion from us nor do
we express any opinion, concerning: (i) North Carolina state securities laws,
(ii) the North Carolina state tax implications of the issuance or the holding of
any Certificates or the underlying notes, (iii) the priority of any liens on any
portion of the Trust Estate or proceeds thereof, or (iv) the consequences of any
insolvency proceedings with respect for the Company.
This opinion letter is rendered only as of the date hereof. We undertake
no obligation to update this opinion letter after the date hereof or to give
notice as to any future changes of facts or law that might affect the opinions
set forth herein. This opinion letter is limited to the matters expressly stated
herein, and no other opinion shall be implied or inferred herefrom.
We have provided this opinion letter to the addressees in our capacity as
special counsel to the Company in connection with the transactions contemplated
by the Participation Agreements. This opinion letter is solely for your use and
may not be relied upon for any other purpose or by any other person without our
prior written consent.
Very truly yours,
[Exhibit A-2 to
Note Purchase
Agreement - Form
of Lease]
--------------------------------------------------------------------------------
LEASE AGREEMENT
dated as of ___________, 199_
between
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
Owner Trustee,
Lessor,
and
MIDWAY AIRLINES CORPORATION
Lessee.
Covering One Canadair Regional
Jet Series 200ER Aircraft
Registration Number
N_______
--------------------------------------------------------------------------------
This Lease Agreement is subject to a security interest in favor of The First
National Bank of Maryland, as Indenture Trustee, under the Trust Indenture and
Security Agreement dated as of _________ __, 199_, for the benefit of the
holders of the Equipment Notes referred to in such Trust Indenture and Security
Agreement. This Lease Agreement has been executed in counterparts. To the
extent, if any, that this Lease Agreement constitutes chattel paper (as such
term is defined in the Uniform Commercial Code as in effect in any
jurisdiction), no security interest in this Lease Agreement may be created
through the transfer or possession of any counterpart other than the counterpart
containing the receipt therefor executed by The First National Bank of Maryland,
as Indenture Trustee, on the signature page thereof.
TABLE OF CONTENTS
Page
Section 1. Interpretation................................................. 1
(a) Definitions.................................................... 1
(b) References..................................................... 1
(c) Headings....................................................... 1
(d) Appendices, Schedules and Exhibits............................. 2
Section 2. Delivery and Leasing of the Aircraft........................... 2
(a) Leasing of the Aircraft........................................ 2
(b) Delivery and Acceptance of the Aircraft Under the Lease........ 2
Section 3. Term and Rent.................................................. 2
(a) Term........................................................... 2
(b) Basic Rent..................................................... 2
(c) Supplemental Rent.............................................. 3
(d) Adjustments to Basic Rent and Termination Values............... 3
(e) Manner of Payment.............................................. 5
(f) Minimum Rent................................................... 5
(g) Rent Obligations Unconditional................................. 6
Section 4. The Lessor's Representations and Warranties.................... 7
Section 5. Possession, Operation and Use,
Maintenance Registration and Insignia.......................... 7
(a) General........................................................ 7
(b) Possession..................................................... 7
(c) Operation and Use.............................................. 10
(d) Maintenance.................................................... 11
(e) Registration................................................... 11
Section 6. Inspection; Financial Information.............................. 12
Section 7. Replacement and Pooling of Parts; Alterations, Modifications
and Additions; Substitution of Engines......................... 13
(a) Replacement of Parts........................................... 13
(b) Title to Parts................................................. 13
(c) Pooling or Parts Leasing....................................... 13
(d) Alterations, Modifications and Additions....................... 14
(e) Substitution of Engines........................................ 15
Section 8. Loss, Destruction or Requisition............................... 17
(a) Event of Loss with Respect to the Airframe..................... 17
(b) Effect of Replacement.......................................... 18
(c) Effect of Termination Value Payment............................ 18
(d) Conditions to Airframe Replacement............................. 19
(e) Non-Insurance Payments Received on Account of an Event of
Loss........................................................... 21
(f) Requisition for Use............................................ 22
(g) Certain Payments to be Held As Security........................ 23
Section 9. Insurance...................................................... 23
(a) Public Liability and Property Damage Insurance................. 23
(b) Insurance Against Loss or Damage to the Aircraft and Engines... 24
(c) Additional Insureds; Loss Payment.............................. 24
(d) Deductibles and Self-Insurance................................. 25
(e) Application of Hull Insurance Proceeds......................... 25
(f) Insurance for Own Account...................................... 26
(g) Reports, etc................................................... 26
Section 10. Liens.......................................................... 27
Section 11. Recordation and Further Assurances............................. 28
(a) Recordation of Lease........................................... 28
(b) Further Assurances............................................. 28
Section 12. Return of Aircraft and Records................................. 28
(a) Return of Aircraft............................................. 28
(b) Return of Other Engines........................................ 28
(c) Fuel; Records.................................................. 29
(d) Condition of Aircraft.......................................... 29
(e) Delayed Return................................................. 29
Section 13. Renewal Option and Purchase Options............................ 29
(a) Renewal Terms.................................................. 29
(b) Lessee Purchase Options........................................ 30
(i) Rights to Purchase....................................... 30
(ii) Option to Assume Equipment Notes......................... 31
(iii) Notice of Exercise of Option............................. 31
Section 14. Voluntary Termination for Obsolescence......................... 31
(a) Termination by Sale of Aircraft................................ 31
(b) Payments Due Upon Sale of Aircraft............................. 32
(c) Preemptive Election by Lessor.................................. 33
(d) Termination of Lease........................................... 33
(e) Effect of No Sale or Preemptive Delivery to Lessor............. 33
Section 15. Investment of Security Funds................................... 34
Section 16. Events of Default.............................................. 34
Section 17. Remedies....................................................... 36
Section 18. Lessor's Right to Perform for the Lessee....................... 38
Section 19. Bankruptcy..................................................... 39
Section 20. Assignment: Benefit and Binding Effect......................... 39
(a) Assignment by the Lessee....................................... 39
(b) Assignment by the Lessor....................................... 39
(c) Benefit and Binding Effect..................................... 39
(d) Sublessee's Performance and Rights............................. 40
Section 21. Owner Trustee's Limitation on Liability........................ 40
Section 22. Certain Agreements of Lessee................................... 40
Section 23. Miscellaneous.................................................. 41
(a) Notices........................................................ 41
(b) Counterparts................................................... 41
(c) Amendments..................................................... 41
(d) Agreement to Lease............................................. 42
(e) Governing Law.................................................. 42
Appendix A Definitions
Exhibit A Form of Lease Supplement
Exhibit B Certain Economic Information
Exhibit C Basic Rent
Exhibit D Termination Values
Exhibit E List of Countries
Exhibit F Return Conditions
THIS LEASE AGREEMENT, dated as of ____________, 199_, between FIRST
UNION TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, not
in its individual capacity but solely as Owner Trustee, the Lessor, and MIDWAY
AIRLINES CORPORATION, a Delaware corporation, the Lessee.
W I T N E S S E T H:
WHEREAS, the Lessor intends to purchase the Aircraft pursuant to the
terms of the Participation Agreement;
WHEREAS, the Lessee desires to lease from the Lessor and the Lessor
is willing to lease to the Lessee the Aircraft upon and subject to the terms and
conditions of this Lease; and
WHEREAS, the parties intend this Lease to constitute a true lease
and not a security agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration the receipt and adequacy of
which is hereby acknowledged, and intending to be legally bound, the parties do
hereby agree as follows:
Section 1. Interpretation.
(a) Definitions.
Capitalized terms used herein and defined in Appendix A shall,
except as such definitions may be specifically modified in the body of this
Lease for the purposes of a particular section, paragraph or clause, have the
meanings given such terms in Appendix A and, unless otherwise specified, such
meanings shall be equally applicable to both the singular and the plural forms
of such terms.
(b) References.
References in this Lease to sections, paragraphs, clauses,
appendices, schedules and exhibits are to sections, paragraphs, clauses,
appendices, schedules and exhibits in and to this Lease unless otherwise
specified. Paragraphs identified with a letter and clauses identified with a
number or letter within a section may be referred to either by section reference
(for example, this is Section l(b)) or by paragraph and clause reference (for
example, this is also paragraph (b) of Section 1) with the same meaning.
(c) Headings.
The headings of the various sections, paragraphs and clauses of this
Lease and the table of contents are for convenience of reference only and shall
not modify, define, expand or limit any of the terms or provisions hereof.
(d) Appendices, Schedules and Exhibits.
The appendices, schedules and exhibits are part of this Lease.
Section 2. Delivery and Leasing of the Aircraft.
(a) Leasing of the Aircraft.
Subject to the satisfaction or waiver of the conditions precedent
stated in the Participation Agreement, the Lessor agrees to lease to the Lessee,
and the Lessee agrees to lease from the Lessor, the Aircraft on the terms and
conditions set forth herein, such leasing to be evidenced by the execution and
delivery by the Lessor and the Lessee on the Delivery Date of a Lease
Supplement.
(b) Delivery and Acceptance of the Aircraft Under the Lease.
The Lessor hereby authorizes one or more persons designated by the
Lessee as the authorized representative or representatives of the Lessor to
accept delivery of the Aircraft from the [Lessor][Manufacturer]. By executing
and delivering Lease Supplement No. 1, the Lessee confirms to the Lessor that
the Lessee has duly and irrevocably accepted delivery of the Aircraft for all
purposes of this Lease.
Section 3. Term and Rent.
(a) Term.
The Aircraft is leased for a Term which shall comprise the Basic
Term and, at the option of the Lessee exercised in accordance with Section
13(a), one or more Renewal Terms. The Basic Term shall commence on the Delivery
Date and continue through the Expiration Date; and each Renewal Term shall be
for the applicable period provided in Section 13(a), except that the Term
(including the Basic Term or any Renewal Term, as the case may be) shall end
upon any earlier termination of this Lease according to its terms.
(b) Basic Rent.
The Lessee shall pay Basic Rent in consecutive semi-annual
installments on each Basic Rent Payment Date during the Basic Term, each such
installment to be in an amount determined by multiplying Lessor's Cost by the
percentage set forth in Exhibit C for the applicable Basic Rent Payment Date.
The Lessee shall pay Basic Rent
-2-
during a Renewal Term in the amounts and at the times provided in Section 13(a)
for such Renewal Term.
(c) Supplemental Rent.
The Lessee shall pay to the Lessor, or to whoever shall be entitled
thereto, any and all Supplemental Rent when the same shall become due and owing.
The Lessee shall pay as Supplemental Rent:
(i) to the Lessor, on demand, interest at the Past Due
Rate on any part of any installment of Basic Rent not paid
when due for the period for which the same shall be overdue;
(ii) to whoever shall have been entitled to receive the
relevant payment of Supplemental Rent, on demand, interest at
the Past Due Rate on any payment of Supplemental Rent (other
than interest payable under this clause (ii)) not paid when
due for the period for which the same shall be overdue; and
(iii) to the Lessor, an amount equal to any Make-Whole
Premium as and when such amount is due and payable by the
Lessor under the terms of the Indenture (except in the case of
any prepayment pursuant to Section 6.02(a)(iii) of the
Indenture), except as otherwise provided in Section 14(b).
(d) Adjustments to Basic Rent and Termination Values.
All installments of Basic Rent remaining to be paid during the Basic
Term shall be recalculated and adjusted, upwards or downwards as the case may be
(and corresponding adjustments shall be made to the Termination Values
applicable during the remaining Basic Term) to maintain the net economic return
of the Owner Participant and, to the greatest extent consistent with such
maintenance of such net economic return, to minimize the net present value
(calculated at a discount rate equal to the Applicable Rate or such other rate
as may be specified by the Lessee to the Owner Participant) of the remaining
Basic Rent payments (or, if the Lessee shall have so specified to the Owner
Participant, the remaining Basic Rent Payments to any date when a purchase
option is exercisable at a fixed price under Section 13(b) together with the
price payable in connection with the exercise of such purchase option), if:
(i) the Delivery Date shall not be __________, 199_;
(ii) there shall be a refinancing or refunding of the debt evidenced
by the Certificates pursuant to Section 13 of the Participation Agreement;
-3-
(iii) the Transaction Costs payable by the Owner Participant
pursuant to Section 8.01(a) of the Participation Agreement shall be
greater or less than __ percent of Lessor's Cost;
(iv) there shall be an adjustment of Termination Values as provided
in Section ___ of the Tax Indemnity Agreement; or
(v) there shall be any increase in the amount of interest due on the
Equipment Notes pursuant to the Registration Rights Agreement.
Adjustments to the installments of Basic Rent (expressed as percentages of
Lessor's Cost) set forth in Exhibit C and conforming adjustments to the amounts
of Termination Values (expressed as percentages of Lessor's Cost) set forth in
Exhibit D shall be calculated by the Owner Participant in accordance with the
terms of this paragraph, and the Owner Participant shall deliver to the Lessee,
the Lessor and the Indenture Trustee schedules setting forth the revised
percentages that the Owner Participant proposes to include in Exhibits C and D,
subject to review by the Lessee and verification as provided herein. In the
event of a dispute regarding any such adjustment which is not resolved by
agreement of the Lessee and the Owner Participant, the adjustments, at the
request of the Lessee delivered to the Owner Participant within 30 days after
receipt of the Owner Participant's proposed adjustments, shall be subjected to
verification by a nationally recognized firm of accountants to be selected by
the Lessee and reasonably acceptable to the Owner Participant. The Owner
Participant shall provide to such accounting firm on a confidential basis such
information as such accounting firm may reasonably require, including, without
limitation, a true copy of this Agreement and a full description of the
methodology and assumptions employed by the Owner Participant in calculating the
Basic Rent and Termination Values set forth in Exhibits C and D as in effect on
the Delivery Date and a true copy of the calculations of the same performed by
the Owner Participant at the time, to enable such accounting firm to determine
whether the adjustments proposed by the Owner Participant are mathematically
accurate, apply the same methodology and assumptions as were employed in the
calculations of the Basic Rent and Termination Values in effect on the Delivery
Date, and are otherwise in conformity with the provisions of this Lease. The
Lessee and its financial advisors shall be entitled to submit such data and
views as the Lessee may elect to such accounting firm concerning the proposed
adjustments. The accounting firm shall be requested to deliver to each of the
Owner Participant, the Lessee, the Lessor and the Indenture Trustee within 30
days after its appointment its determination as to the change; if any, that are
appropriate with respect to the adjustments proposed by the Owner Participant.
The adjustments proposed by the Owner Participant, if not disputed by the Lessee
as provided above, or the determination of the accounting firm as provided
above, as the case may be, shall be conclusive, final and binding upon the
Lessor, the Lessee and the Owner Participant, and Exhibits C and D shall be
amended to reflect them. All reasonable fees and expenses payable to an
accounting firm pursuant to this paragraph shall be paid by the Lessee except
that such fees and expenses shall be paid entirely by the Owner Participant if,
as a rest of changes
-4-
determined by the accounting firm, the net present value, discounted at the
Applicable Rate or such other rate as the Lessee may have specified as provided
above in this paragraph, of Basic Rent remaining to be paid is five basis points
(0.05%) or more lower than it would have been under the adjustments proposed by
the Owner Participant.
(e) Manner of Payment.
All Rent payable by the Lessee to the Lessor hereunder shall be paid
to the Lessor at its principal office at One Xxxxxx Square, 000 Xxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx, 00000, Attention: Corporate Trust
Administration, or to such other address as the Lessor shall specify in a notice
to the Lessee, in United States dollars in immediately available funds, so that
the Lessor receives the full amount of each payment not later than 12:00 noon
Eastern Time on the due date thereof, except that so long as the Indenture shall
not have terminated pursuant to its terms, all Rent payable to the Lessor (other
than Excepted Payments) shall be paid to the Indenture Trustee, in the manner
provided above, at its principal office as specified in the Indenture, or as the
Indenture Trustee may otherwise direct by a notice delivered to the Lessee prior
to the date of payment. If any Rent is due on a day that is not a Business Day,
such Rent shall be paid on the next succeeding Business Day with the same force
and effect as if paid on the scheduled date of payment and no interest shall
accrue on the amount of such payment from and after such scheduled date to the
time of payment on such next succeeding Business Day. Whether or not the
Indenture remains in effect, Rent constituting Excepted Payments shall be paid
directly to the Person entitled thereto.
(f) Minimum Rent.
Anything herein to the contrary notwithstanding,
(i) each installment of Basic Rent, whether or not such
installment has been adjusted pursuant to Section 3(d), shall
be in an amount which is at least equal to the amount of any
principal of and interest on the Equipment Notes that falls
due and is payable by the Lessor pursuant to the terms of the
Indenture (other than by reason of acceleration of the
Equipment Notes) on the date when such installment of Basic
Rent is due, and
(ii) Termination Value, whether or not Termination Value
has been adjusted pursuant to Section 3(d), shall be in an
amount which is at least equal to, as of the applicable date
of payment, the aggregate unpaid principal of and accrued
interest on the Equipment Notes (other than overdue amounts
attributable to an Indenture Event of Default not caused
solely by an Event of Default).
-5-
The preceding sentence is intended solely to provide for, and to allocate as
between the Lessor and the Lessee the risk of, the possibility of miscalculation
by the Lessor and the Lessee of amounts of Rent which it is contemplated will be
available to the Indenture Trustee, as the Lessor's security assignee under the
Indenture, for application to the payment of amounts payable by the Lessor on
the Equipment Notes. The Lessee does not guarantee, and nothing in this
paragraph (f) shall be construed to be a guarantee by the Lessee, that the
Lessor will repay any principal of or pay any premium or interest on any
Equipment Notes or that the Indenture Trustee will, or will be able to, apply
for such purposes any amount of Rent paid by the Lessee.
(g) Rent Obligations Unconditional.
The Lessee's obligations to pay all Rent due and owing under the
terms hereof shall be absolute and unconditional and shall not be affected by
any circumstance whatsoever including, without limitation, (i) any setoff,
counterclaim, recoupment or other right which the Lessee may have against the
Lessor, the Owner Participant, the Indenture Trustee, the holders of the
Equipment Notes or anyone else for any reason whatsoever, (ii) any defect in the
title, airworthiness, condition, design, operation or fitness for use of, or any
damage to or loss or destruction of, the Aircraft, or any interference,
interruption or cessation in or prohibition of the use or possession thereof by
the Lessee for any reason whatsoever, including, without limitation, any such
interference, interruption, cessation or prohibition resulting from the act of
any governmental authority or any violation by the Lessor of Section 4 hereof,
(iii) any Liens, encumbrances or rights of others with respect to the Aircraft,
(iv) the invalidity or unenforceability or lack of due authorization or other
infirmity of this Lease or any lack of right, power or authority of the Lessor
or the Lessee to enter into this Lease, (v) any insolvency, bankruptcy,
reorganization or similar proceedings by or against the Lessee, or any other
Person, or (vi) any other cause whether similar or dissimilar to the foregoing,
any present or future law notwithstanding, it being the intention of the parties
that all Rent payable by the Lessee hereunder shall continue to be payable in
all events in the manner and at the times provided herein. Such Rent shall not
be subject to any abatement and the payments thereof shall not be subject to any
setoff or any reduction for any reason other than manifest error in the
calculation thereof or the documentation of this Lease. To the extent permitted
by Applicable Law, the Lessee waives any rights which it may now have or which
may be conferred upon it by statute or otherwise to terminate, cancel, quit or
surrender this Lease except in accordance with the terms hereof. Nothing herein
shall be construed as a waiver by the Lessee of any claim it may have against
any Person arising under any of the Operative Agreements or otherwise,
including, without limitation, any claim that Rent payments demanded from or
paid by the Lessee are or were not due, are or were erroneous or were paid under
mistake or protest, or be construed as a limitation on any rights of the Lessee
to assert any claim in any proceeding at law, in equity or otherwise against the
Lessor or any other Person and to pursue and obtain relief on such claim in such
manner as the Lessee shall deem appropriate other than by setoff against Rent
payments due under the terms hereof.
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Section 4. The Lessor's Representations and Warranties.
(a) THE LESSOR LEASES THE AIRCRAFT HEREUNDER "AS-IS" AND NEITHER THE
LESSOR, TRUST COMPANY INDIVIDUALLY NOR THE OWNER PARTICIPANT SHALL BE DEEMED TO
HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, CONDITION, VALUE, DESIGN, OPERATION, MERCHANTABILITY, COMPLIANCE
WITH SPECIFICATIONS, CONSTRUCTION, PERFORMANCE OR FITNESS FOR USE OF THE
AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS,
WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY
PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT
LIABILITY IN TORT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE
AIRCRAFT OR ANY PART THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except
that the Lessor warrants that on the Delivery Date the Lessor shall have
received whatever title was conveyed to it by the Lessee and the Lessor warrants
that the Aircraft shall be free of Lessor's Liens during the Term.
(b) The Lessor covenants that during the Term, as long as no Event
of Default has occurred and is continuing, the Lessee's possession, use and
quiet enjoyment of the Aircraft leased hereunder shall not be interrupted by the
Lessor (or any Person claiming through the Lessor).
Section 5. Possession, Operation and Use,
Maintenance Registration and Insignia.
(a) General.
Except as otherwise expressly provided herein, the Lessee shall be
entitled during the Term to operate, use, locate, employ or otherwise utilize or
not utilize the Airframe, Engines and Parts leased hereunder in any lawful
manner or place in accordance with the Lessee's business judgment.
(b) Possession.
The Lessee shall not sublease, or otherwise in any manner deliver,
relinquish or transfer possession of the Airframe or any Engine leased hereunder
to any Person or install any Engine, or permit any Engine to be installed, on
any airframe other than the Airframe, during the Term, without the prior consent
of the Lessor, which consent shall not be unreasonably withheld, except that the
Lessee may without the prior consent of the Lessor:
(i) enter into a charter or wet lease or other similar
arrangement under which the Lessee has operational control of
the
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Airframe and any Engines installed thereon in the course of
the Lessee's business (which shall not be considered a
transfer of possession hereunder), provided that the Lessee's
obligations under this Lease shall continue in full force and
effect notwithstanding any such charter or wet lease or other
similar arrangement;
(ii) deliver possession of the Airframe or any Engine or
any Part to the manufacturer thereof or to any organization
for testing, service, repair, maintenance, overhaul work or
other similar purposes or for alterations or modifications or
additions required or permitted by the terms of this Lease;
(iii) subject the Airframe and any Engines installed
thereon to interchange agreements or any Engine to interchange
or pooling agreements or arrangements which are applicable to
other similar property owned by or leased to the Lessee and
are entered into by the Lessee in the course of its airline
business with any air carrier, provided, that (A) no such
agreement or arrangement shall under any circumstances result
in, contemplate or require the transfer of title to the
Aircraft or Airframe and (B) if the Lessor's title to any
Engine shall be divested under any such agreement or
arrangement, such divestiture shall be deemed to be an Event
of Loss with respect to such Engine and the Lessee shall
comply with Section 7(e) hereof in respect thereof;
(iv) install an Engine on an airframe owned by the
Lessee free and clear of all Liens except (A) Permitted Liens,
(B) those which apply only to the engines (other than the
Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than
Parts) installed on such airframe, and (C) those created by
the rights of other air carriers under interchange or pooling
agreements or other arrangements customary in the airline
industry which do not contemplate, permit or require the
transfer of title to such airframe or engines installed
thereon;
(v) install an Engine on an airframe, leased to the
Lessee or purchased by the Lessee subject to a conditional
sale or other security agreement, provided that such Engine
shall not thereby become subject to the lien of such lease,
conditional sale or other security agreement;
(vi) install an Engine on an airframe, owned by the
Lessee, leased by the Lessee or purchased by the Lessee
subject to a conditional sale or other security agreement
under circumstances where neither clause (iv) nor clause (v)
above is applicable,
-8-
provided that any divestiture or non-curable impairment of
title to such Engine resulting from such installation shall be
deemed an Event of Loss with respect to such Engine and the
Lessee shall comply with Section 7(e) hereof;
(vii) transfer possession of the Airframe or Engine to
the United States of America or any instrumentality thereof
pursuant to the Civil Reserve Air Fleet Program (as
established and administered pursuant to Executive Order
11490, as amended, as superseded by United States Executive
Order No. 12656) or any similar or substitute program;
(viii) transfer possession of the Airframe or any Engine
to the United States of America, or to a foreign government,
when required by Applicable Law (it being understood that
nothing in this clause (viii) shall relieve the Lessee from
its obligations under Section 8(a) if such transfer becomes an
Event of Loss); and
(ix) transfer possession of the Airframe or any Engine
to the United States of America or any instrumentality or
agency thereof pursuant to a sublease, contract or other
instrument;
(x) so long as no Specified Default shall have occurred
and be continuing, and subject to the provisions of this
Section 5(b), enter into a sublease with respect to any Engine
or the Airframe and Engines or engines then installed on the
Airframe to a Permitted Sublessee which is not the subject of
a petition filed under any bankruptcy laws or other insolvency
laws in effect at the time such sublease is entered into, or
any other foreign air carrier; provided that in the case only
of a sublease to a foreign air carrier that is not a Permitted
Sublessee, the Lessor receives at the time of such sublease an
opinion of counsel to the Lessee (which counsel shall be
reasonably satisfactory to the Lessor) to the effect that
there exist no possessory rights in favor of the sublessee
under the laws of such sublessee's country which would, upon
bankruptcy or insolvency of or other default by the Lessee and
assuming that at such time such sublessee is not insolvent or
bankrupt, prevent the return of such Engine or the Airframe
and such Engine or engine to the Lessor in accordance with and
when permitted by the terms of Section 17(a) upon the exercise
by the Lessor of its remedies under Section 17(a);
provided that (1) the rights of any transferee who receives possession by reason
of a transfer permitted by this Section 5(b) (other than by a transfer of an
Engine which is deemed an Event of Loss) shall be subject and subordinate to all
the terms of this Lease, (2) the Lessee shall remain primarily liable hereunder
for the performance of all
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the terms of this Lease and all the terms and conditions of this Lease and the
other applicable Operative Agreements shall remain in effect and (3) no sublease
or transfer of possession otherwise in compliance with this Section 5(b) shall
(x) result in any registration or reregistration of the Aircraft except to the
extent permitted by Section S(e) or the maintenance, operation or use thereof
except in compliance with Sections 5(c) and 5(d), (y) permit any action not
permitted to the Lessee hereunder or (z) extend beyond the end of the Term
(except to the extent that the Lessee shall have irrevocably committed to
exercise a purchase option in accordance with the terms hereof).
In the case of any sublease permitted under this Section 5(b), the
Lessee will include in such sublease appropriate provisions which (a) make such
sublease expressly subject and subordinate to all of the terms of this Lease and
the Indenture, including the rights of the Lessor and the Indenture Trustee to
avoid such sublease in the exercise of their rights to repossession of the
Airframe and Engines hereunder and thereunder; (b) expressly prohibit any
further subleasing of the Airframe and Engines; (c) require that the Airframe
and Engines be maintained in accordance with a maintenance program approved by
the Aeronautical Authority applicable thereto; (d) require the sublessee to
comply with the terms of Section 9 hereof; (e) limit the term of such sublease
(including renewal rights) to a period not beyond the end of the Term unless the
Lessee shall then have irrevocably committed to exercise a purchase option in
accordance with the terms hereof; and (f) require that the Airframe and Engines
be used in accordance with the limitations applicable to the Lessee's possession
and use provided in this Lease.
The Lessor hereby agrees for the benefit of the lessor or secured
party of any airframe (other than the Airframe) leased to the Lessee or
purchased by the Lessee subject to a conditional sale or other security
agreement, which lease or conditional sale or other security agreement also
covers an engine or engines owned by the lessor under such lease or subject to a
security interest in favor of the secured party under such conditional sale or
other security agreement, that the Lessor will not acquire or claim, as against
such lessor or secured party, any right, title or interest in any such engine as
the result of such engine being installed on the Airframe at any time while such
engine is owned by such lessor or is subject to such conditional sale or other
security agreement or security interest in favor of such secured party.
(c) Operation and Use.
The Lessee shall not operate, use or locate the Airframe or any
Engine, or suffer such Airframe or any Engine to be operated, used or located
(i) in any area excluded from coverage by any insurance required by the terms of
Section 9 hereof, except in the case of a requisition by the United States of
America where the Lessee obtains indemnity from the Government against
substantially the same risks and for at least the amounts of the insurance
required by Section 9 hereof covering such area, or (ii) outside the United
States or Canada in any recognized or, in the Lessee's reasonable judgment,
threatened area of hostilities unless covered by war risk insurance, or in
either case unless the Airframe or such Engine is operated or used
-10-
under contract with the Government under which contract the Government assumes
liability for substantially the same risks in at least the same amounts as would
be covered by such insurance. The Lessee shall not permit the Airframe or any
Engine to be used or operated during the Term in violation of any Applicable Law
or in violation of any airworthiness certificate, license or registration
relating to the Aircraft or such Engines issued by any competent governmental
authority, unless (i) the validity thereof is being contested in good faith and
by appropriate proceedings which do not involve a material danger of the sale,
forfeiture or loss of the Airframe or such Engine, or (ii) it is not possible
for the Lessee to comply with the laws of a jurisdiction other than the United
States (or other than any jurisdiction in which the Aircraft is then registered)
because of a conflict with the applicable laws of the United States (or such
jurisdiction in which the Aircraft is then registered).
(d) Maintenance.
The Lessee, at its own cost and expense, shall during the Term
service, repair, maintain, overhaul and test the Airframe and each Engine or
cause the same to be done in accordance with a maintenance program approved by
the Aeronautical Authority, and shall keep or cause to be kept the Airframe and
each Engine in such operating condition as may be necessary to enable the
airworthiness certification of the Aircraft to be maintained in good standing at
all times under the applicable rules and regulations of the Aeronautical
Authority, except when aircraft of the same type, model or series as the
Airframe (powered by engines of the same type as those with which the Airframe
shall be equipped at the time of grounding) registered in the same country have
been grounded by the Aeronautical Authority, provided, however, that if the
airworthiness certificate of the Aircraft shall be withdrawn, then, subject to
Section 8 hereof, so long as the Lessee is taking or causing to be taken all
necessary action to promptly correct the condition which caused such withdrawal,
no Event of Default shall arise from such withdrawal. Nothing herein shall be
deemed to prevent the Lessee from taking the Aircraft out of service for
maintenance or modifications permitted hereunder or storage in accordance with
applicable Aeronautical Authority requirements and sound practice for such
storage. The Lessee shall maintain or cause to be maintained all records, logs
and other documents required by the Aeronautical Authority to be maintained in
respect of the Aircraft.
(e) Registration
Except as otherwise permitted by Section 4.02(b) of the
Participation Agreement, or as otherwise required by the Federal Aviation Act or
rules, regulations, or orders promulgated thereunder, or to the extent that such
registration cannot be effected or continued due to the Lessor's or the Owner
Participant's failure to comply with the citizenship or other eligibility
requirements for registration of commercial aircraft under the Transportation
Code or any rule, regulation or order promulgated thereunder, the Aircraft shall
be duly registered in the name of the Lessor under the Transportation Code at
all times during the Term; provided that the Lessor shall execute and deliver
all such documents as the Lessee may reasonably request for the
-11-
purpose of effecting, continuing or (as provided in this Section 5(e) hereof and
Section 4.02(b) of the Participation Agreement) changing such registration.
Section 6. Inspection; Financial Information.
At all reasonable times during the Term, but upon at least 15 days'
prior notice to the Lessee and at a time and place reasonably acceptable to the
Lessee, the Lessor and the Indenture Trustee or their authorized representatives
may at their own expense and risk conduct a visual walk-around inspection of the
Aircraft and any Engine (including a visual walk-around inspection of the
Aircraft during any "C" check or other heavy maintenance) and may inspect the
books and records of the Lessee relating to the operation and maintenance
thereof; provided that (a) such representatives shall be fully insured to the
reasonable satisfaction of the Lessee by the Lessor or the Indenture Trustee
with respect to any risks incurred in connection with any such inspection, (b)
any such inspection shall be subject to the safety, security and workplace rules
applicable at the location where such inspection is conducted and any applicable
governmental rules or regulations, (c) in the case of an inspection during a
maintenance visit, such inspection shall not in any respect interfere with the
normal conduct of such maintenance visit or extend the time required for such
maintenance visit or, in any event, at any time interfere with the use or
operation of the Airframe or any Engine or with the normal conduct of the
Lessee's or a permitted sublessee's business, and (d) the Lessee shall not be
required to undertake or incur any additional liabilities in connection with any
such inspection. All information obtained in connection with any such inspection
shall be held confidential by the Lessor, the Indenture Trustee and the Owner
Participant and shall not be furnished or disclosed by them to anyone other than
each other, their bank examiners, auditors, accountants, agents and legal
counsel and any Person with whom the Owner Participant is in good faith
conducting negotiations relating to the possible transfer and sale of the Owner
Participant's interest in the Trust Estate or the Aircraft, if such Person shall
have entered into an agreement similar to that contained in this Section 6
whereby such Person agrees to hold such information confidential, and except as
may be required by an order of any court or administrative agency or by any
statute, rule, regulation or order of any governmental authority or as may be
necessary to enforce the terms of this Lease, provided, however, that the Lessor
or the Owner Participant may during any time it is offering the Aircraft for
sale make customary disclosures to prospective purchasers of the Aircraft as to
the then current flight and maintenance status of the Aircraft. The Lessor and
the Indenture Trustee shall have no duty to make any such inspection and shall
not incur any liability or obligation by reason of not making any such
inspection.
-12-
Section 7. Replacement and Pooling of Parts; Alterations, Modifications and
Additions; Substitution of Engines.
(a) Replacement of Parts.
Except as otherwise provided in the proviso to the third sentence of
Section 7(d) or if the Airframe or an Engine to which a Part relates has
suffered an Event of Loss, the Lessee, at its own cost and expense, will during
the Term promptly replace all Parts that may from time to time become worn out,
lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use for any reason whatsoever. In addition, in
the ordinary course of maintenance, service, repair, overhaul or testing, the
Lessee, at its own cost and expense, may remove any Parts, whether or not worn
out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use, provided that the Lessee, at its own cost
and expense, shall, except as otherwise provided in the proviso to the third
sentence of Section 7(d), replace such Parts as promptly as practicable with
replacement Parts or temporary replacement parts as provided in Section 7(c)
hereof. All replacement Parts shall be free and clear of all Liens except for
pooling arrangements to the extent permitted by Section 7(c) and Permitted Liens
and shall be in as good operating condition as, and shall have a value and
utility at least equal to, the Parts replaced assuming such replaced Parts were
in the condition and repair required to be maintained by the terms hereof.
(b) Title to Parts.
Except as otherwise provided in the proviso to the third sentence of
Section 7(d), all Parts at any time removed from the Airframe or any Engine
shall remain the property of the Lessor and subject to this Lease, no matter
where located, until such time as such Parts shall be replaced by Parts that
have been incorporated or installed in or attached to such Airframe or Engine
and that meet the requirements for replacement Parts specified in Section 7(a).
Immediately upon any replacement Part becoming incorporated or installed in or
attached to an Airframe or Engine as provided in Section 7(a), without further
act, (i) title to the replaced Part shall thereupon vest in the Lessee, in
"as-is, where-is" condition, free and clear of all rights of the Lessor and the
Indenture Trustee and any Lessor's Liens and shall no longer be deemed a Part
hereunder; (ii) title to such replacement Part shall thereupon vest in the
Lessor (subject only to Permitted Liens); and (iii) such replacement Part shall
become subject to this Lease and be deemed part of such Airframe or Engine, as
the case may be, for all purposes hereof to the same extent as the Parts
originally incorporated or installed in or attached to such Airframe or Engine.
(c) Pooling or Parts Leasing.
Any Part removed from the Airframe or from any Engine as provided in
Section 7(a) may be subjected by the Lessee to a pooling or parts leasing
agreement or arrangement of a type customary in the airline industry entered
into in the ordinary
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course of the Lessee's business, provided the part replacing such removed Part
shall be incorporated or installed in or attached to such Airframe or Engine in
accordance with Sections 7(a) and 7(b) as promptly as practicable after the
removal of such removed Part. In addition, any replacement part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with Section 7(a) may be owned by another airline or vendor as
customary in the airline industry, subject to a pooling or parts leasing
arrangement, provided that the Lessee, at its expense within a commercially
reasonable time, either (i) causes title to such temporary replacement part to
vest in the Lessor in accordance with Section 7(b) by the Lessee acquiring title
thereto for the benefit of the Lessor free and clear of all Liens except
Permitted Liens, at which time such temporary replacement part shall become a
Part and become subject to this Lease or (ii) replaces such temporary
replacement part by incorporating or installing in or attaching to such Airframe
or Engine a further replacement Part owned by the Lessee free and clear of all
Liens except Permitted Liens and by causing title to such further replacement
Part to vest in the Lessor in accordance with Section 7(b).
(d) Alterations, Modifications and Additions.
The Lessee, at its own expense, shall make alterations and
modifications in and additions to the Airframe and any Engine as may be required
to be made from time to time during the Term by Applicable Law regardless of
upon whom such requirements are, by their terms, nominally imposed; provided,
that the Lessee may, in good faith, contest the validity or application of any
such standard in any reasonable manner which does not materially adversely
affect the Lessor or the lien of the Indenture. In addition, the Lessee, at its
own expense, may from time to time make or cause to be made such alterations and
modifications in and additions to the Airframe and any Engine as the Lessee may
deem desirable in the proper conduct of its business (including, without
limitation, removal of Parts), provided further that no such alteration,
modification or addition diminishes, in the Lessee's reasonable judgment, the
value, utility, condition or airworthiness of such Airframe or Engine below the
value, utility, condition or airworthiness thereof immediately prior to such
alteration, modification or addition, assuming such Airframe or Engine was then
in the condition required to be maintained by the terms of this Lease, except
that the value (but not the utility, condition or airworthiness) of the Aircraft
may be reduced by the value of Parts which the Lessee deems obsolete or no
longer suitable or appropriate for use in the Airframe or any Engine which shall
have been removed and not replaced, if the aggregate value of all such obsolete
or unsuitable Parts removed from the Aircraft and not replaced shall not exceed
$300,000. Title to all Parts incorporated or installed in or attached or added
to the Airframe or any Engine as the result of any alteration, modification or
addition effected by the Lessee shall, without further act, vest in the Lessor
free and clear of any Liens except Permitted Liens and become subject to this
Lease; provided that the Lessee may, at any time during the Term, remove any
such Part from the Airframe or an Engine if (i) such Part is in addition to, and
not in replacement of or in substitution for, any Part originally incorporated
or installed in or attached to such Airframe or Engine at the time of delivery
thereof hereunder or any Part in replacement of, or in substitution for, any
such original Part, (ii) such Part is
-14-
not required to be incorporated or installed in or attached or added to such
Airframe or Engine pursuant to the terms of Section 5(d) or the first sentence
of this Section 7(d) and (iii) such Part can be removed from such Airframe or
Engine without diminishing or impairing the value, condition, utility or
airworthiness which such Airframe or Engine would have had at the time of
removal had such alteration, modification or addition not been effected by the
Lessee assuming the Aircraft was otherwise maintained in the condition required
by this Lease. Upon the removal by the Lessee of any such Part as above
provided, title thereto shall, without further act, vest in the Lessee, in
"as-is, where-is" condition, free and clear of all rights of the Lessor and the
Indenture Trustee and any Lessor's Liens and such Part shall no longer be deemed
a Part hereunder. Any Part not removed by the Lessee as above provided prior to
the return of the Airframe or respective Engine to the Lessor hereunder shall
remain the property of the Lessor.
(e) Substitution of Engines.
The Lessee shall have the right at its option at any time, on at
least 30 days' prior notice to the Lessor and the Indenture Trustee, to
substitute, and if an Event of Loss shall have occurred with respect to an
Engine, shall within 90 days of the occurrence of such Event of Loss and on at
least five days' prior notice to the Lessor substitute, a Replacement Engine for
any Engine not then installed or held for use on the Airframe. In such event,
immediately upon the effectiveness of such substitution on the date set forth in
such notice and without further act, (i) title to the Replacement Engine shall
thereupon vest in the Lessor free and clear of all Liens (other than Permitted
Liens), (ii) title to the replaced Engine shall thereupon vest in the Lessee, in
"as-is, where-is" condition, free and clear of all rights of the Lessor and the
Indenture Trustee and any Lessor's Liens and shall no longer be deemed an Engine
hereunder, and (iii) such Replacement Engine shall become subject to this Lease
and be deemed part of the Aircraft for all purposes hereof to the same extent as
the Engine originally installed on or attached to the Airframe. Upon the
substitution of a Replacement Engine, the following conditions shall be
satisfied at the Lessee's sole cost and expense and the parties agree to
cooperate with the Lessee to the extent necessary to enable it to timely satisfy
such conditions:
(i) the following documents shall be duly authorized,
executed and delivered by the respective party or parties
thereto, and an executed counterpart of each shall be
delivered to the Lessor, the Owner Participant and, if the
Indenture is in effect, the Indenture Trustee:
(A) a Lease Supplement covering the Replacement
Engine, which shall have been duly filed for recordation
with the FAA;
(B) so long as the Indenture shall not have been
satisfied and discharged, an Indenture Supplement
covering
-15-
the Replacement Engine, which shall have been duly filed
for recordation with the FAA;
(C) a full warranty xxxx of sale (as to title), in
form and substance satisfactory to the Lessor, covering
the Replacement Engine, executed by the owner thereof in
favor of the Lessor;
(D) as long as the Indenture is in effect, such
documents as may be required under Section 9.08 of the
Indenture relating to the Replacement Engine;
(E) (i) so long as the Indenture shall not have
been satisfied and discharged, such Uniform Commercial
Code financing statements covering the security
interests created by the Indenture (or any similar
statements or other documents required to be filed or
delivered pursuant to the laws of the jurisdiction in
which the Replacement Engine may be registered in
accordance with Section 5(e)), and (ii) "precautionary"
Uniform Commercial Code financing statements as are
deemed necessary or desirable by counsel for the Owner
Participant or the Indenture Trustee to protect the
ownership interests of the Owner Trustee and the
security interests of the Indenture Trustee in the
Replacement Engine; and
(F) an Officer's Certificate of the Lessee
certifying that the Replacement Engine is of at least
equal value and utility, and in as good operating
condition, as the Engine it replaces assuming such
Engine had been maintained in the condition required
hereunder; and
(ii) upon request by the Lessor or the Indenture
Trustee, the Lessee shall furnish the Lessor and the Indenture
Trustee with an opinion, reasonably satisfactory in form and
substance to the Lessor and the Indenture Trustee, of the
Lessee's counsel, which may be the Lessee's General Counsel or
Associate General Counsel, to the effect that such bills of
sale or other documents reasonably requested by the Lessor or
the Indenture Trustee are sufficient to convey title to such
Replacement Engine to the Lessor and with respect to the
effectiveness of the interests in the Indenture Estate which
the Indenture purports to create.
Upon satisfaction of all conditions to such substitution, (x) the
Lessor shall execute and deliver, and cause the Indenture Trustee to execute and
deliver to the Lessee such bills of sale and other documents and instruments as
the Lessee shall
-16-
reasonably request to evidence the transfer to the Lessee and vesting of all
right, title and interest in and to the replaced Engine in the Lessee, in
"as-is, where-is" condition, free and clear of all right, title and interest of
the Lessor and the Indenture Trustee, and any Lessor's Liens; (y) the Lessor
shall assign to the Lessee all claims it may have against any other Person
relating to an Event of Loss giving rise to such substitution and shall exercise
such rights as it has to cause such assignment to be free and clear of the Lien
of the Indenture and (z) the Lessee shall receive all insurance proceeds (other
than those reserved to others under Section 9(f) hereof) and proceeds in respect
of any Event of Loss giving rise to such replacement to the extent not
previously applied to the purchase price of the Replacement Engine as provided
in Sections 9(e)(i) and 8(e)(B).
Section 8. Loss, Destruction or Requisition.
(a) Event of Loss with Respect to the Airframe.
Upon the occurrence of an Event of Loss with respect to the
Airframe, the Lessee shall forthwith (and in any event within 30 days after such
occurrence) give the Lessor and the Indenture Trustee notice of such Event of
Loss. The Lessee shall, within 60 days after such occurrence, give the Lessor
and the Indenture Trustee notice of its election to perform one of the following
options (it being agreed that if the Lessee shall not have given the Lessor such
notice of such election, the Lessee shall be deemed to have elected to perform
the option identified in the following clause (ii)):
(i) subject to the satisfaction of the closing
conditions contained in Section 8(d), on a date not more than
180 days after the occurrence of the Event of Loss, convey or
cause to be conveyed to the Lessor, and to be leased by the
Lessee hereunder in replacement of the Airframe and Engines
with respect to which the Event of Loss occurred, a
Replacement Airframe (together with the same number of
Replacement Engines as the number of Engines, if any, which
were subject to such Event of Loss), such Replacement Airframe
and Replacement Engines to be free and clear of all Liens
except Permitted Liens and to have a value and utility at
least equal to the Airframe and Engines, if any, so replaced
(assuming such Airframe and Engines were in the condition and
repair required by the terms hereof); provided that, if the
Lessee shall not perform its obligation to effect such
replacement under this clause (i) during the 180-day period of
time provided herein, it shall give the Lessor and the
Indenture Trustee notice to such effect upon or before the
expiration of such period of time and shall promptly pay on
the first Loss Payment Date next following the thirtieth
(30th) day after the date of such notice to the Lessor, in
immediately available funds, the amount specified in clause
(ii) below; or
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(ii) pay or cause to be paid to the Lessor in
immediately available funds on a date specified at least 30
days in advance by the Lessee, which date shall be a
Termination Date not more than 180 days after the occurrence
of the Event of Loss, an amount equal to (A) the arrears
portion, if any, of Basic Rent payable on such Termination
Date, or if such Termination Date is not a date on which Basic
Rent is payable, a pro-rata portion (pro-rated daily) of the
arrears portion, if any, of Basic Rent payable on the next
succeeding date on which Basic Rent is payable, together with
all unpaid Termination or Basic Rent, if any, payable before
such payment date plus (B) all unpaid Supplemental Rent (other
than Value) due on or before such payment date, plus (C) the
Termination Value for the Aircraft determined as of the date
of payment or, if such date of payment is beyond the end of
the Term, the Termination Value as of the last Termination
Date of the Term.
(b) Effect of Replacement.
Should the Lessee have provided a Replacement Aircraft as provided
for in Section 8(a)(i), (i) this Lease shall continue with respect to such
Replacement Aircraft as though no Event of Loss had occurred; (ii) the Lessor
shall convey "as-is, where-is", without recourse or warranty except for a
warranty against Lessor's Liens, to the Lessee all right, title and interest of
the Lessor, in and to the Airframe and the Engine or Engines, if any, installed
on the Airframe upon the occurrence of the Event of Loss by executing and
delivering to the Lessee such bills of sale and other documents and instruments
as the Lessee may reasonably request to evidence such conveyance and shall
exercise such rights as it has to cause such Airframe and Engines and the
Purchase Agreement and Assignment with respect to such Airframe and Engines to
be released from the Lien of the Indenture; (iii) the Lessor shall assign to the
Lessee all claims it may have against any other Person arising from the Event of
Loss and (iv) the Lessee shall be entitled to receive all insurance proceeds
(other than those reserved to others under Section 9(f)) and proceeds from any
award in respect of condemnation, confiscation, seizure or requisition,
including any investment interest thereon, to the extent not previously applied
to the purchase price of the Replacement Aircraft as provided in Sections
9(e)(iii) and 8(e)(i).
(c) Effect of Termination Value Payment.
In the event of a payment in full of the Termination Value for the
Aircraft and other Rent payable as provided in Section 8(a)(ii), (i) this Lease
and the obligations of the Lessee to pay Rent (except for Supplemental Rent
obligations which survive pursuant to Section 3(c) and Articles 6 and 7 of the
Participation Agreement or the Tax Indemnity Agreement or which have accrued but
have not otherwise been paid as of the date of such payment) shall terminate and
the Term shall end, (ii) any remaining insurance proceeds (other than those
reserved to others under Section 9(f)), including
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any investment interest thereon, shall be promptly paid over to the Lessee; and
(iii) the Lessor shall convey, "as-is, where-is" without recourse or warranty,
except for a warranty against Lessor's Liens, to the Lessee all right, title and
interest of the Lessor in and to the Airframe and Engines and shall execute and
deliver to the Lessee such bills of sale and other documents and instruments as
the Lessee may reasonably request to evidence such conveyance and shall exercise
such rights as it has to cause to be released from the Lien of the Indenture,
the Airframe and the Engines and the Purchase Agreement and Assignment with
respect to such Airframe and Engines, all claims for damage to such Airframe and
Engines, if any, against third persons arising from the Event of Loss and any
interest of the Lessor in engines (which are not Engines) installed on the
Airframe.
(d) Conditions to Airframe Replacement.
The Lessee's right to substitute a Replacement Aircraft as provided
in Section 8(a)(i) shall be subject to the fulfillment, at the Lessee's sole
cost and expense, in addition to the conditions contained in such Section
8(a)(i), of the following conditions precedent:
(i) On the date when the Replacement Aircraft is
delivered to the Lessor (such date being referred to in this
Section 8(d) as the "Replacement Closing Date"), no Event of
Default shall have occurred and be continuing and the Lessor
and the Indenture Trustee shall have received an Officer's
Certificate so certifying;
(ii) On the Replacement Closing Date the following
documents shall have been duly authorized, executed and
delivered by the respective party or parties thereto and shall
be in full force and effect, and an executed counterpart of
each thereof (or, in the case of the FAA Bills of Sale (or a
comparable document, if any, of another Aeronautical
Authority, if applicable) referred to below, a photocopy
thereof) shall have been delivered to the Lessor and the
Indenture Trustee:
(A) a Lease Supplement covering the Replacement Aircraft,
which shall have been duly filed for recordation with the FAA;
(B) so long as the Indenture shall not have been discharged
and satisfied, an Indenture Supplement covering the Replacement
Aircraft, which shall have been duly filed for recordation with the
FAA;
(C) an FAA Xxxx of Sale (or a comparable document, if any, of
another Aeronautical Authority, if applicable) covering the
Replacement Aircraft, executed by the owner thereof in favor of the
Lessor, and dated the Replacement Closing Date;
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(D) a full warranty (as to title) xxxx of sale, in form and
substance satisfactory to the Indenture Trustee and the Lessor,
covering the Replacement Aircraft, executed by the owner thereof in
favor of the Lessor, dated the Replacement Closing Date;
(E) as long as the Indenture is in effect, such documents as
may be required under Section 9.08 of the Indenture;
(F) (1) so long as the Indenture shall not have been
discharged, such Uniform Commercial Code financing statements (or
any similar statements or other documents required to be filed or
delivered pursuant to the laws of the jurisdiction in which the
Replacement Aircraft may be registered in accordance with Section
5(e)) covering the security interests created by the Indenture, and
(2) such "precautionary" Uniform Commercial Code financing
statements as are deemed necessary or desirable by counsel for the
Owner Participant or the Indenture Trustee to protect the ownership
interests of the Owner Trustee and the security interests of the
Indenture Trustee in the Replacement Aircraft; and
(G) an Officer's Certificate of the Lessee certifying that the
Replacement Aircraft is a Canadair Regional Jet Series 200ER
aircraft of a more advanced model in as good operating condition as,
the Aircraft it replaces assuming such Aircraft had been maintained
in the condition required hereunder;
(iii) On or before the Replacement Closing Date, the
Lessor and the Indenture Trustee (acting directly or by
authorization to their respective special counsel) shall have
received such documents and evidence with respect to the
Lessee, the Lessor, the owner of such Replacement Aircraft or
the Indenture Trustee, as the Lessor or the Indenture Trustee
or their respective special counsel may reasonably request in
order to establish the consummation of the transactions
contemplated by Section 8(a)(i) and this Section 8(d), the
taking of all necessary corporate action in connection
therewith and compliance with the conditions set forth in this
Section 8(d), in each case in form and substance reasonably
satisfactory to the Lessor and the Indenture Trustee;
(iv) The Lessor and the Indenture Trustee (acting
directly or by authorization to their respective special
counsel) shall each have received satisfactory evidence as to
the compliance with Section 9 hereof with respect to the
Replacement Aircraft;
(v) On the Replacement Closing Date, (A) the Lessor
shall receive good title to the Replacement Aircraft free and
clear of
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Liens (other than Permitted Liens), (B) the Replacement
Aircraft shall have been duly certified by the Aeronautical
Authority as to type and airworthiness in accordance with the
terms of this Lease, and (C) application for registration of
the Replacement Aircraft in accordance with Section 5(e) shall
have been duly made with the Aeronautical Authority;
(vi) the Owner Participant shall have received an
appraisal reasonably satisfactory to it with respect to the
Replacement Aircraft;
(vii) The Lessor and the Indenture Trustee shall have
received (acting directly or by authorization to its special
counsel) (A) an opinion, satisfactory in form and substance to
the Lessor and the Indenture Trustee, of counsel to the Lessee
(which may be the Lessee's General Counsel) to the effect that
the xxxx of sale referred to in clause (ii)(D) above
constitutes an effective instrument for the conveyance of
title to the Replacement Airframe and Replacement Engines, if
any, to the Lessor, and (B) an opinion of qualified FAA
counsel (or counsel in such jurisdiction outside of the United
States where the Aircraft may be registered in accordance with
Section 5(e)), as to, in the case of FAA counsel, the due
recordation of the Lease Supplement, the Indenture Supplement
and all other documents or instruments the recordation of
which is necessary to perfect and protect the rights of the
Lessor and the Indenture Trustee in the Replacement Aircraft
or, in the case of counsel in another jurisdiction, the taking
of all action necessary in such jurisdiction for such
purposes; and
(viii) Either (1) the Owner Participant shall have
received an opinion of independent tax counsel (selected by
the Owner Participant and reasonably acceptable to the
Lessee), reasonably satisfactory to the Owner Participant, to
the effect that there shall be no adverse tax consequences
resulting from such replacement (and the Owner Participant
shall use its best efforts to cause a timely opinion to be
delivered) or (2) the Lessee shall have agreed to indemnify
the Owner Participant for such adverse tax consequences as may
be identified in such an opinion.
(e) Non-Insurance Payments Received on Account of an Event of Loss.
As between the Lessor and the Lessee, any payments on account of an
Event of Loss (other than insurance proceeds or other payments the application
of which is provided for in this Section 8 or elsewhere in this Lease, as the
case may be, or payments in respect of damage to the business or property of the
Lessee) with
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respect to the Aircraft, an Engine or any Part received at any time by the
Lessor or by the Lessee from any governmental authority or other Person will be
applied as follows:
(i) if such payments are received with respect to an
Event of Loss as to the Aircraft, and the Airframe or the
Airframe and the Engines or engines installed thereon are
being replaced by the Lessee pursuant to Section 8(a)(i), such
payments shall be paid over to, or retained by, the Lessee,
provided that if the Lessee has not completed such
replacement, such payments shall be paid over to, or retained
by, the Lessor as security, and upon completion of, or in
connection with a closing for, such replacement, be paid over
to or retained by the Lessee;
(ii) if such payments are received with respect to an
Event of Loss to an Engine or Part that has been or is being
replaced by the Lessee pursuant to the terms hereof, such
payments shall be paid over to, or retained by, the Lessee;
and
(iii) if such payments are received with respect to an
Event of Loss as to the Aircraft, and if the Airframe or the
Airframe and the Engines or engines installed thereon has not
been and will not be replaced as contemplated by Section 8(a),
(x) so much of such payments as shall not exceed the
Termination Value and other amounts required to be paid by the
Lessee pursuant to Section 8(a) hereof shall be applied in
reduction of the Lessee's obligation to pay such Termination
Value and other amounts, to the extent not already paid by the
Lessee, and, after the Termination Value and all amounts
required to be paid to the Lessor pursuant to Section 8(a)(ii)
above shall be paid in full, shall be applied to reimburse the
Lessee for such Termination Value and other amounts up to the
full amount thereof, and (y) the balance, if any, of such
payment remaining thereafter shall be applied to reimburse the
Lessee for its reasonable costs (including attorney's fees),
if any, of procuring such payments, and (z) the balance
remaining, if any, shall then be distributed between the
Lessor and the Lessee as their interests may appear.
(f) Requisition for Use.
In the event of a requisition for use by any government during the
Term of the Airframe and the Engines, if any, or engines installed on the
Airframe, the Lessee shall promptly notify the Lessor of such requisition and
all of the Lessee's obligations under this Lease shall continue to the same
extent as if such requisition had not occurred except to the extent that the
performance or observance of any obligation by the Lessee shall have been
prevented or delayed by such requisition, provided that the Lessee's obligations
for the payment of money and under Section 9 (except while
-22-
an assumption of liability by the government of the United States of the scope
referred to in Section 5(c) is in effect) shall not be reduced or delayed by
such requisition. Any payments received by the Lessor or the Lessee from such
government with respect to such requisition of use shall be paid over to, or
retained by, the Lessee. In the event of an Event of Loss of an Engine resulting
from the requisition for use by a government of such Engine (but not the
Airframe), the Lessee will replace such Engine hereunder by complying with the
terms of Section 7(e) and any payments received by the Lessor or the Lessee from
such government with respect to such requisition shall be paid over to, or
retained by, the Lessee.
(g) Certain Payments to be Held As Security.
Any amount referred to in this Section 8 or Section 9 hereof which
is payable to the Lessee shall not be paid to the Lessee, or, if it has been
previously paid directly to the Lessee, shall not be retained by the Lessee, if
at the time of such payment a Specified Default shall have occurred and be
continuing, but shall be paid to and held by the Lessor as security for the
obligations of the Lessee under this Lease, and at such time as there shall not
be continuing any such Specified Default, such amount and any gain realized as a
result of Permitted Investments required to be made pursuant to Section 15 or
Section 5.08 of the Indenture shall be paid over to the Lessee.
Section 9. Insurance.
(a) Public Liability and Property Damage Insurance.
Subject to the rights of the Lessee under Section 9(d), the Lessee
shall, without expense to the Lessor, maintain or cause to be maintained in
effect at all times during the Term with insurers of recognized responsibility
public liability insurance (including, without limitation, passenger legal
liability, property damage and product liability coverage but excluding
manufacturer's product liability coverage) with respect to the Aircraft in an
amount not less than the Lessee may carry from time to time on other similar
aircraft in its fleet but not less than the Minimum Liability Amount; provided
that an agreement of the Government to insure against or indemnify for
substantially the same risks to at least the same amount shall satisfy the
requirements of this Section 9(a). Such insurance shall be of the type usually
carried by the Lessee with respect to similar aircraft and engines, and covering
risks of the kind customarily insured against by the Lessee.
During any period that the Aircraft is grounded and not in operation
for any reason, the Lessee may modify the insurance required by this Section
9(a)(i) to reduce the amounts of public liability and property damage insurance
and (ii) to modify the scope of the risks covered and the type of insurance, in
both circumstances to conform to such insurance customary in the United States
airlines industry for regional air carriers similarly situated with the Lessee
in respect of similar aircraft which are grounded, not in operation, and stored
or hangared, except that the amounts of coverage and scope of risk covered and
the type of insurance shall be the same as from
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time to time applicable to aircraft owned or leased by Lessee on the ground, not
in operation, and stored or hangared.
(b) Insurance Against Loss or Damage to the Aircraft and Engines.
Subject to the rights of the Lessee under Section 9(d), the Lessee
shall, without expense to the Lessor, maintain or cause to be maintained in
effect at all times during the Term with insurers of recognized responsibility
all risk, agreed value, ground and flight hull insurance, which may exclude war
risks and allied perils, covering the Aircraft for an amount not less than the
Termination Value from time to time; provided that, neither the Lessee nor any
Permitted Sublessee shall be required to maintain all-risk flight aircraft hull
insurance with respect to any period in which the Aircraft is grounded for any
reason and properly stored or hangared. Such hull insurance or other personal
property insurance of the Lessee shall cover Engines or engines and Parts
temporarily removed from the Airframe, pending replacement by installation of
the same or similar Engines, engines or Parts on the Airframe but such insurance
need not cover an Engine while attached to an airframe not owned, leased or
operated by the Lessee or a permitted sublessee. Such insurance shall be of the
type usually carried by the Lessee with respect to similar aircraft and engines,
and covering risks of the kind customarily insured against by the Lessee. If and
to the extent that the Lessee or a sublessee operates the Aircraft (A) on routes
where it maintains war risk insurance in effect with respect to other similar
owned or leased aircraft in its fleet, or (B) on routes (other than routes
within the United States, Canada, Mexico, Bermuda and islands other than Cuba in
the Caribbean Basin) where the custom in the industry is to carry war risk
insurance, the Lessee or such sublessee shall maintain or cause to be maintained
such insurance in effect with respect to the Aircraft in the lesser of an amount
at least equal to Termination Value or the amount of such insurance customarily
carried by corporations engaged in the same or similar business similarly
situated with the Lessee and owning or operating similar aircraft and engines on
such routes or similar routes, provided that if the requirement to maintain war
risk insurance arises under clause (A) of this sentence, such insurance shall be
maintained in an amount not less than that maintained by the Lessee or such
sublessee on similar aircraft in its fleet. An agreement by the United States
Government to insure against or indemnify for substantially the same risks to at
least the same amount will satisfy any of the requirements of this Section 9(b).
(c) Additional Insureds; Loss Payment.
The Lessee shall cause all policies of insurance carried in
accordance with this Section 9 to name the Additional Insureds as their
respective interests may appear as additional insureds. Such policies shall
provide with respect to such Additional Insureds that (i) none of their
respective interests in such policies shall be invalidated by any act or
omission or breach of warranty or condition contained in such policies by the
Lessee or, in the case of any particular Additional Insured, any other
Additional Insured; (ii) no cancellation or lapse of coverage for nonpayment of
premium or otherwise, and no substantial change of coverage which adversely
affects the interests
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of any such Additional Insured, shall be effective as to such Additional Insured
until 30 days (or such lesser period as may be applicable in the case of any war
risk coverage) after receipt by such Additional Insured of written notice from
the insurers of such cancellation, lapse or change; (iii) they shall have no
liability for premiums, commissions, calls, assessments or advances with respect
to such policies; (iv) such policies will be primary without any right of
contribution from any other insurance carried by such Additional Insureds; and
(v) the insurers waive any rights of set-off, counterclaim, deduction or
subrogation against such Additional Insureds. Each liability policy shall
provide that all the provisions thereof, except the limits of liability, shall
operate in the same manner as if there were a separate policy covering each
insured and provide that the exercise by the insurer of rights of subrogation
derived from rights retained by the Lessee will not delay payment of any claim
that would otherwise be payable but for such rights of subrogation. Each hull
policy shall name the Indenture Trustee as loss payee as long as the Indenture
shall remain in effect and thereafter shall name the Lessor as loss payee;
provided that, so long as the insurers shall not have received written notice
that an Event of Default has occurred and is continuing, if insurance proceeds
in the aggregate equal $2,000,000 or less, then such proceeds shall be payable
to the Lessee and, notwithstanding the foregoing, any amounts up to Termination
Value (i) of any proceeds which in the aggregate exceed $2,000,000, (ii) of any
proceeds in respect of a total loss or an Event of Loss or (iii) if the insurers
shall have received written notice that an Event of Default has occurred and is
continuing, any proceeds with respect to any single loss, shall be payable to
such loss payee.
(d) Deductibles and Self-Insurance.
The Lessee may from time to time self-insure, by way of deductible
or premium adjustment provisions in insurance policies or otherwise, the risks
required to be insured against pursuant to this Section 9 in such amounts as are
then self-insured with respect to similar owned or leased aircraft in the
Lessee's fleet but in no case shall such self-insurance in the aggregate exceed
$15,000,000 on a per occurrence or on fleetwide basis. A deductible per
occurrence that is not in excess of the prevailing standard market deductible
for similar aircraft shall be permitted, for each aircraft in the Lessee's
fleet, in addition to such self-insurance.
(e) Application of Hull Insurance Proceeds.
Subject to Section 8(g), as between the Lessor and the Lessee, any
payments received under policies of hull or other property insurance required to
be maintained by the Lessee pursuant to Section 9(b), shall be applied as
follows:
(i) if such payments are received with respect to loss
or damage (including an Event of Loss with respect to an
Engine) not constituting an Event of Loss with respect to the
Airframe, payments in the aggregate of $2,000,000 or less
shall be paid over to or retained by the Lessee and, subject
to Section 9(c), any payments which in the aggregate are
greater than $2,000,000 shall
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be paid over to or retained by the Lessor for payment to the
Lessee only upon performance of its repair or replacement
obligation;
(ii) if such payments are received with respect to an
Event of Loss with respect to the Airframe and the Airframe is
not being replaced by the Lessee pursuant to Section 8(a)(i),
so much of such payments as shall not exceed the Termination
Value and other amounts required to be paid by the Lessee
pursuant to Section 8(a)(ii) shall be applied in reduction of
the Lessee's obligation to pay such amounts if not already
paid by the Lessee, and to reimburse the Lessee if such
amounts shall have been paid, and the balance, if any, of such
payments shall be promptly paid over to or retained by the
Lessee; and
(iii) if such payments are received with respect to the
Airframe or the Airframe and Engines or engines installed
thereon and the Airframe is being replaced by the Lessee
pursuant to Section 8(a)(i), such payments shall be paid over
to, or retained by the Lessee, provided that if the Lessee has
not completed such replacement, such payments shall be paid
over to, or retained by, the Lessor as security, and upon
completion of, or in connection with a closing for, such
replacement, be paid over to or retained by the Lessee.
(f) Insurance for Own Account.
Nothing in this Section 9 shall prohibit the Lessor, the Owner
Participant or the Lessee obtaining insurance with respect to the Aircraft for
its own account (including, without limitation, in the case of the Lessee, hull
insurance under the same policies maintained pursuant to this Section 9 in
amounts in excess of those required to be maintained pursuant to this Section 9)
and any proceeds payable thereunder shall be payable as provided in the
insurance policy relating thereto, provided that no such insurance may be
obtained which would limit or otherwise adversely affect the availability
coverage or payment of any insurance required to be obtained or maintained
pursuant to this Section 9, it being understood that all salvage rights to the
Airframe or the Engines shall remain with the Lessee's insurers at all times.
(g) Reports, etc.
The Lessee will during the Term furnish to the Lessor and the
Indenture Trustee evidence of renewal of the insurance policies required
pursuant to this Section 9 prior to the cancellation, lapse or expiration of
such insurance policies and, on or before the renewal dates of the insurance
policies carried by the Lessee pursuant to this Section 9, a report signed by a
firm of aircraft insurance brokers, not affiliated with the Lessee, appointed by
the Lessee and reasonably satisfactory to the Lessor, stating the opinion of
such firm that the insurance then carried and maintained on the Aircraft
-26-
complies with the terms hereof and that such renewal insurance will on and after
the effective date thereof so comply with the terms hereof, provided that all
information contained in such report shall be held confidential by the Lessor
and the Indenture Trustee, and shall not be furnished or disclosed by them to
anyone except the Owner Participant and bona fide prospective transferees of the
Owner Participant and their respective agents (provided that they shall agree
for the benefit of the Lessee to hold all such information similarly
confidential) or as may be required by Applicable Law. The Lessee will instruct
such firm to give prompt written advice to the Lessor and the Indenture Trustee
of any default in the payment of any premium and of any other act or omission on
the part of the Lessee of which it has knowledge and which would in such firm's
opinion invalidate or render unenforceable, in whole or in any material part,
any insurance on the Aircraft. The Lessee will also instruct such firm to advise
the Lessor and the Indenture Trustee in writing at least 30 days prior to the
termination or cancellation of, or material adverse change in, such insurance
carried and maintained on the Aircraft pursuant to this Section 9.
Section 10. Liens.
The Lessee shall not during the Term directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to the Airframe or
any Engine or title thereto or any interest therein or in this Lease except (a)
the respective rights of the Lessor and the Lessee as provided herein, the Lien
of the Indenture and the rights of the parties to the other Operative
Agreements; (b) the rights of others under agreements or arrangements to the
extent expressly permitted in Sections 5(b) and 7(c); (c) Liens for Taxes either
not yet due or being contested in good faith by appropriate proceedings so long
as such proceedings do not involve a material danger of the sale, forfeiture or
loss of the Airframe or an Engine; (d) Liens of suppliers, mechanics, workers,
repairers, employees, airport operators, air traffic control authorities or
other like Liens arising in the ordinary course of business and for amounts the
payment of which is either not yet delinquent or is being contested in good
faith (and for the payment of which adequate reserves have been provided) by
appropriate proceedings, so long as such proceedings do not involve a material
danger of the sale, forfeiture or loss of the Airframe or an Engine; (e) Liens
arising out of judgments or awards against the Lessee with respect to which at
the time there shall have been secured a stay of execution; (f) Lessor's Liens,
Trust Company Liens and Indenture Trustee Liens; (g) salvage and similar rights
of insurers under policies of insurance maintained with respect to the Aircraft
and (h) Liens with respect to which the Lessee (or any sublessee) has provided a
bond or other security adequate in the reasonable opinion of the Lessor. Liens
described in clauses (a) through (h) above are referred to herein as "Permitted
Liens." The Lessee shall promptly, at its own expense, take such action as may
be necessary to duly discharge (by bonding or otherwise) any Lien other than a
Permitted Lien arising at any time during the Term;
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Section 11. Recordation and Further Assurances.
(a) Recordation of Lease.
The Lessee shall cause this Lease, any Lease Supplements, and any
and all additional instruments which shall be executed pursuant to the terms
hereof to be kept, filed and recorded and to be re-executed, refiled and
re-recorded at all times during the Term with the FAA or other Aeronautical
Authority to the extent required to perfect and preserve the Lessor's interest
in the Aircraft.
(b) Further Assurances.
The Lessee and the Lessor will each promptly and duly execute and
deliver to the other such further documents and assurances and take such further
action as the other may from time to time reasonably request in order to more
effectively carry out the intent and purpose of this Lease and to establish and
protect the rights and remedies created or intended to be created in favor of
the Lessor and the Lessee hereunder, including, without limitation, if requested
by the Lessor or the Lessee, the execution and delivery of supplements or
amendments hereto, in recordable form, subjecting any replacement or substituted
aircraft or engine to this Lease and the recording or filing of counterparts
hereof, or of financing statements with respect hereto.
Section 12. Return of Aircraft and Records.
(a) Return of Aircraft.
Upon the termination of this Lease at the expiration of the Term or
upon the earlier termination of this Lease pursuant to the terms hereof, unless
the Lessee shall purchase the Aircraft or there shall have been an Event of Loss
with respect to the Aircraft, the Lessee, at its own expense, shall, except as
otherwise expressly provided herein, return the Airframe by delivering the same
to the Lessor in the continental United States of America at a location on the
Lessee's domestic route system chosen by the Lessee, fully equipped with two
Engines or other General Electric CF34-3B1 Series 200 engines (or engines of a
comparable or another manufacturer of a comparable or an improved model and
suitable for installation and use on the Airframe and owned by the Lessee) duly
installed thereon.
(b) Return of Other Engines.
In the event any engine not owned by the Lessor shall be returned
with the Airframe, such engine shall satisfy the requirements for a Replacement
Engine, and the Lessee shall, at its own expense and concurrently with such
return, furnish the Lessor with a full warranty xxxx of sale, in form and
substance reasonably satisfactory to the Lessor, with respect to each such
engine and shall take such other action as the Lessor may reasonably request in
order that such engine shall be duly and properly
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titled in the Lessor free and clear of all Liens other than Lessor's Liens. Upon
passage of title such engine shall be deemed to be an Engine for all purposes
hereof and thereupon the Lessor will transfer to the Lessee, without recourse or
warranty except a warranty against Lessor's Liens, all right, title and interest
of the Lessor or any affiliate in and to an Engine not installed on the Airframe
at the time of the return thereof and, if the Indenture has not been discharged,
shall exercise such rights as it has to cause such Engine to be released from
the Lien of the Indenture.
(c) Fuel; Records.
Upon the return of the Aircraft, (i) the Lessee shall have no
obligation with respect to the amount of fuel or oil contained in the Airframe
and the Lessor shall reimburse the Lessee for all fuel contained in the
Aircraft's fuel tanks at the Lessee's then current cost of fuel at the place of
redelivery and (ii) the Lessee shall deliver to the Lessor all logs, manuals,
certificates and inspection, modification and overhaul records which are
required to be maintained with respect thereto under applicable rules and
regulations of the FAA and Department of Transportation.
(d) Condition of Aircraft.
The Aircraft when returned to the Lessor shall be in the operating
condition required by Exhibit F hereto.
(e) Delayed Return. (i) In the event that the use of the Aircraft,
Airframe or any Engine in the normal course of the business of air
transportation is prohibited on the last day of the Term or the date the
Aircraft is required to be redelivered pursuant to Section 14 due to
circumstances beyond the Lessee's or any sublessee's control, the Lessee shall
not be required to return such Aircraft to the Lessor but may retain custody and
control of the Aircraft for a period not in excess of 180 days beyond the last
day of the Term or such date in order to attempt in a diligent manner to remedy
any condition prohibiting such use or (ii) in connection with any sublease of
the Aircraft by the Lessee permitted under the terms of this Lease, the Lessee
may at its option, upon written notice to the Lessor given not less than 30 days
prior to the last day of the Term or such date, extend this Lease for a period
not in excess of 30 days beyond the last day of the Term in order to enable the
Lessee to bring the Aircraft to the condition required under this Section 12 on
its return to the Lessor; provided that in either case, the Lessee shall pay to
the Lessor at monthly intervals the daily equivalent of the average annual Basic
Rent payable during the Term (excluding the Interim Term) pursuant to the terms
hereof for each day of such period.
Section 13. Renewal Option and Purchase Options.
(a) Renewal Terms.
The Lessee shall have the right to extend this Lease for a period of
___ years beyond the expiration of the Basic Term (the "Fixed Renewal Term"). At
the end
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of the Fixed Renewal Term, the Lessee shall have the right to further extend
this Lease for any number of successive periods of not less than one year (each
a "Subsequent Renewal Term"; the Fixed Renewal Term and each Subsequent Renewal
Term, being hereinafter sometimes called a ("Renewal Term"). The Fixed Renewal
Term will commence at the end of the Basic Term and a Subsequent Renewal Term
will commence at the end of the Fixed Renewal Term or the preceding Subsequent
Renewal Term, as the case may be. Such right to extend this Lease shall be
exercised upon notice to the Lessor not less than 120 days before the expiration
of the Basic Term or the preceding Renewal Term, as the case may be. Such notice
shall be irrevocable except that in the event the Lessee gives such notice to
the Lessor 180 or more days before the end of the Basic Term or the Renewal Term
then in effect, as the case may be, the Lessee may revoke its election to extend
this Lease within 15 days following the determination of the Fair Market Rental
Value of the Aircraft but in no event later than 90 days prior to the end of the
Basic Term or the preceding Renewal Term, as the case may be. If the Lessee
requests a determination of Fair Market Rental Value at least 180 days before
the expiration of the Basic Term or a Renewal Term, as the case may be, the
Lessor and the Lessee shall comply in a timely manner with their respective
obligations under the definition of "Fair Market Rental Value" to allow any
appraisal of Fair Market Rental Value to be completed in sufficient time to
permit the Lessee to exercise the revocation right provided above. If no
Specified Default shall have occurred and be continuing on the date of such
notice or on the date of the commencement of any Renewal Term, then this Lease
shall be extended for the additional period of such Renewal Term as specified in
such notice on the same conditions as provided for herein. The Basic Rent
payable per annum during the Fixed Renewal Term shall be the lesser of (i) the
then Fair Market Rental Value for the Aircraft and (ii) [__%] of the average
annual Basic Rent over the Basic Term. The rental payable per annum during any
Subsequent Renewal Term shall be the then Fair Market Rental Value for the
Aircraft. Such rental during each Renewal Term shall be payable semi-annually in
arrears. The Termination Value of the Aircraft during each Renewal Term shall be
the lesser of the Fair Market Sales Value thereof at the commencement of such
Renewal Term or ___% of Lessor's Cost.
(b) Lessee Purchase Options.
(i) Rights to Purchase.
The Lessee shall have the right upon notice as provided herein to
purchase the Aircraft (A) on (the "EBO Date") for a price equal to % of Lessor's
Cost (the "EBO Price"); (B) upon the termination of the Basic Term a price equal
to the lesser of the then Fair Market Sales Value of the Aircraft and a price
equal to % of Lessor's Cost; or (C) at the end of any Renewal Term for a price
equal to the then Fair Market Sales Value. Upon the payment by the Lessee of the
purchase price for the Aircraft and the arrears portion of Basic Rent, if any,
payable on the date of purchase, together with all unpaid Basic Rent, if any,
payable before such date and all Supplemental Rent then due and payable
hereunder, the Term shall end and the obligations of the Lessee to pay Rent
hereunder (except for Supplemental Rent
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obligations surviving pursuant to Section 3(c), Articles 8 and 9 of the
Participation Agreement or the Tax Indemnity Agreement or which have otherwise
accrued but not been paid as of the date of such payment) shall cease, and the
Lessor shall convey to the Lessee all right, title and interest of the Lessor in
and to the Aircraft on an "as-is, where is" basis, without recourse or warranty
except a warranty against Lessor's Liens.
(ii) Option to Assume Equipment Notes.
In the event the Lessee elects to purchase the Aircraft pursuant to
clause (A) of Section 13(b)(i), the Lessee may, at its election, assume the
payment obligations of the Lessor with respect to such Equipment Notes as
contemplated by Section 5.10 of the Participation Agreement, in which case the
purchase price to be paid by the Lessee shall be reduced by an amount equal to
the principal of and accrued interest on the Equipment Notes so assumed by the
Lessee.
(iii) Notice of Exercise of Option.
The Lessee's right to purchase provided for in clause (B) or (C) of
Section 13(b)(i) shall be exercised upon notice to the Lessor not less than 180
days before the applicable date of purchase provided in such clause (B) or (C)
as the case may be. Such notice shall be irrevocable, except that where the
purchase price is or may be measured by the Fair Market Sales Value of the
Aircraft the Lessee may revoke its exercise of an option to purchase the
Aircraft within 15 days following the determination of such Fair Market Sales
Value, but in no event later than 90 days prior to the applicable date of
purchase provided in such clause (B) or (C), as the case may be. The Lessee's
right to purchase provided for in clause (A) of Section 13(b)(i) shall be
exercised upon written notice to the Lessor not less than 30 days before the EBO
Date and shall be irrevocable when given.
Section 14. Voluntary Termination for Obsolescence.
(a) Termination by Sale of Aircraft.
So long as no Event of Default shall have occurred and be
continuing, the Lessee shall have the right at its option five years or more
after commencement of the Basic Term on at least 180 days' prior notice (which
notice shall be irrevocable, except as provided below) to the Lessor and the
Indenture Trustee, specifying a proposed date of termination which shall be a
Termination Date, to terminate this Lease if the chief financial officer of the
Lessee shall have certified in writing to the Lessor that the Aircraft shall
have become obsolete or shall be surplus to the Lessee's equipment requirements.
Subject to the Lessor's preemptive election under Section 14(c), during the
period following the giving of such notice of termination until the Termination
Date, the Lessee, as exclusive agent for the Lessor, shall endeavor to sell the
Aircraft "as is", without any warranty by the Lessor or the Lessee except as to
the Lessor's title, on behalf of the Lessor. The Lessee, in acting as agent for
the Lessor, taking account of the Lessor's right to make a preemptive election
under Section 14(c), shall have no
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liability to the Lessor for failure to obtain the best price, shall act in its
sole discretion, and shall be under no duty to solicit bids publicly or in any
particular market, and the Lessor acknowledges that the Lessee's sole interest
in acting as such agent is to sell the Aircraft at a price that reduces or
eliminates the Lessee's obligation hereunder to pay the difference between the
sales price and the Termination Value as of such Termination Date. So long as
the Lessor has not exercised its preemptive election under Section 14(c), the
Lessee may, by notice to the Lessor and the Indenture Trustee, withdraw its
notice of termination, and thereupon this Lease shall continue in full force and
effect. Withdrawal of notice of termination shall not exhaust the Lessee's right
to give a further notice of termination as provided herein. Unless the Lessee
shall withdraw its notice of termination as stated above or the Lessor shall
have made a preemptive election to take possession of the Aircraft in accordance
with Section 14(c), on the Termination Date, or such other date of sale as shall
be consented to in writing by the Lessor and the Lessee, which date shall
thereafter be deemed the Termination Date, the Lessee shall, upon payment in
full of the amounts described in Section 14(b), deliver the Airframe and Engines
or engines installed thereon to the party which shall have prior to such date
agreed to purchase the same, in the same manner as if delivery were being made
to the Lessor pursuant to Section 12, and shall duly transfer to such party
title to any engines which are not Engines delivered with the Airframe in
accordance with the terms of Section 12. The Lessor shall, without recourse or
warranty (except a warranty as to the absence of Lessor's Liens), simultaneously
therewith sell and convey title to the Airframe and the Engines or engines
conveyed to the Lessor as provided in Section 12 for cash to such party and
exercise such rights as it has to cause the Aircraft to be released from the
Lien of the Indenture. Upon the sale of the Airframe and the Engines or engines
conveyed to the Lessor as provided in Section 12 pursuant to this Section 14 and
receipt by the Lessor of all amounts referred to in Section 14(b), the Lessor
will transfer to the Lessee, without recourse or warranty (except a warranty as
to the absence of Lessor's Liens), all right, title and interest of the Lessor
in and to any Engines constituting part of the Aircraft but which were not
delivered to the purchaser with the Airframe.
(b) Payments Due Upon Sale of Aircraft.
The total selling price realized at any sale of the Airframe and
Engines or engines installed thereon in accordance with this Section 15 shall be
retained by the Lessor and, in addition, on the Termination Date, the Lessee
shall pay to the Lessor or, in the case of Supplemental Rent, to the Persons
entitled thereto, in immediately available funds, an amount equal to the sum of
(A) the excess, if any, of (x) the Termination Value as of the Termination Date,
over (y) the net proceeds of the sale of the Aircraft, plus (B) all unpaid
Supplemental Rent due on or before the Termination Date, plus (C) the arrears
portion, if any, of Basic Rent payable on such Termination Date, or if such
Termination Date is not a Basic Rent Payment Date, a pro-rata portion (pro-rated
daily) of the arrears portion, if any, of Basic Rent payable on the next
succeeding Basic Rent Payment Date, together with all unpaid Basic Rent, if any,
payable before the Termination Date.
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(c) Preemptive Election by Lessor.
Notwithstanding the foregoing provisions of this Section 14, the
Lessor may, within 15 days after receipt of the Lessee's notice of termination,
notify the Lessee of its preemptive election to take possession of the Aircraft,
which notice shall be accompanied by an irrevocable undertaking by the Lessor to
pay to the Indenture Trustee the amount required to pay in full (after giving
effect to any installment of Basic Rent due and payable on such date) the
aggregate unpaid principal amount of the outstanding Equipment Notes, together
with all accrued interest thereon and Make Whole Premium, if any (without
releasing Lessee from its obligations under clause (C) of Section 14(b) in
respect of the payment of such amount). Upon payment by the Lessor of such
amount to the Indenture Trustee, and payment of any Basic Rent due on such date,
the Lessee shall have no obligation to pay Termination Value. On the Termination
Date, if the Lessor shall have paid such amount to the Indenture Trustee, the
Lessee shall deliver the Airframe and Engines or engines installed thereon to
the Lessor in accordance with Section 12 and shall pay all unpaid Basic Rent, if
any, payable before the Termination Date, together with all accrued Basic Rent
(on a per diem basis), if any, which would otherwise have been paid in arrears
on the next following Basic Rent Payment Date, all unpaid Supplemental Rent due
on or before or after the Termination Date, and the Lessor shall transfer to the
Lessee title to any Engines constituting part of the Airframes but which were
not then installed on the Aircraft as provided in Section 12(b). If the Lessor,
having given notice or a preemptive election, shall fail to perform any of its
obligations pursuant to this Section 14(c) and as a result thereof this Lease
shall not be terminated on a proposed Termination Date, the Lessor shall
thereafter no longer be entitled to exercise its preemptive election to retain
the Aircraft upon any subsequent termination pursuant to this Section 14 and the
Lessee may at its option at any time thereafter submit a new termination notice.
(d) Termination of Lease.
Upon delivery by the Lessee of the Airframe and Engines or engines
installed thereon and payment by the Lessee of all amounts payable by the Lessee
under either Section 14(b) or 14(c), as the case may be, the obligations of the
Lessee to pay Rent (except for Supplemental Rent obligations surviving pursuant
to the second sentence of Section 3(c) and Articles 6 and 7 of the Participation
Agreement or the Tax Indemnity Agreement or which have otherwise accrued but not
paid as of the Termination Date) shall cease and the Term shall end.
(e) Effect of No Sale or Preemptive Delivery to Lessor.
If on the Termination Date no sale of the Aircraft shall have
occurred and the Lessee has not delivered the Aircraft to the Lessor pursuant to
Section 14(c), the Lessee's notice given pursuant to Section 14(a) shall be
deemed to be withdrawn as of such date and this Lease shall continue in full
force and effect, without prejudice, however, to any claims the Lessee may have
against any Person under the Participation Agreement or otherwise if a failure
to deliver the Aircraft to the Lessor pursuant to
-33-
Section 14(c) shall have been due to a failure of the Lessor to make the payment
by the Lessor provided for in such Section.
Section 15. Investment of Security Funds.
Any monies paid to or retained by the Lessor which are required to
be paid to the Lessee or applied for the benefit of the Lessee (including,
without limitation, amounts payable to the Lessee under Sections 8 and 9), but
which the Lessor is entitled to hold under the terms hereof pending the
occurrence of some event or the performance of some act (including, without
limitation, the remedying of an Event of Default), shall, until paid to the
Lessee or applied as provided herein, be invested by the Lessor (or, if the
Indenture shall not have been discharged, the Indenture Trustee) from time to
time at the direction, risk and expense of the Lessee in Permitted Investments,
subject, in the case of investments by the Indenture Trustee to the terms of
Section 5.08 of the Indenture. There shall be promptly remitted to the Lessee
any gain (including interest received) realized as the result of any such
investment (net of any fees, commissions and other expenses, if any, incurred in
connection with such investment) unless a Specified Default shall have occurred
and be continuing, in which case such gains shall be held subject to the
preceding sentence. The Lessee will promptly pay to the Indenture Trustee or the
Lessor, as the case may be, on demand, the amount of any loss realized as the
result of any such investment (together with any fees, commissions and other
expenses, if any, incurred in connection with such investment).
Section 16. Events of Default.
The following events shall constitute Events of Default and each
such Event of Default shall be deemed to exist and continue so long as, but only
so long as, it shall not have been remedied:
(a) The Lessee shall fail to make any payment of (i) Basic Rent,
Termination Value or a payment required by clause (iii) of the second
sentence of Section 3(c) when due and such failure shall continue for a
period of 10 days or (ii) Supplemental Rent (other than Termination Value
or the payment required by clause (iii) of the second sentence of Section
3(c)) within 30 days after receipt by the Lessee of a written demand
therefor from the Lessor or the Indenture Trustee, provided, that in the
case of Supplemental Rent which constitutes an Excepted Payment, such
demand shall only be effective for purposes of this paragraph (a) if sent
by the Owner Participant or the Lessor and such failure shall not become
an Event of Default until the Owner Participant shall have notified the
Indenture Trustee that it has elected to treat such failure as an Event of
Default;
(b) The Lessee shall fail to procure and maintain property or
liability insurance pursuant to Section 9 or such insurance shall be
cancelled or lapse; provided that such lapse or cancellation shall not
constitute an Event of Default
-34-
until the earlier of 30 days after receipt by the Lessor or the Indenture
Trustee of notice of such lapse or cancellation or the date that the lapse
or cancellation is effective as to the Lessor, the Owner Participant or
the Indenture Trustee;
(c) The Lessee shall operate the Aircraft after having received
notice that the public liability insurance required by Section 9(a) has
lapsed or has been cancelled;
(d) The Lessee shall fail to perform or observe any other covenant
or condition to be performed or observed by it hereunder or under any
other Operative Agreement (other than the Tax Indemnity Agreement), and
such failure shall continue unremedied for a period of 30 days after
delivery of notice of such failure from the Lessor or the Indenture
Trustee to the Lessee, unless such failure is curable and the Lessee
shall, after the delivery of such notice, be diligently proceeding to
correct such failure and shall in fact correct such failure 180 days after
delivery of such notice;
(e) Any material representation or warranty made by the Lessee
herein or in any Operative Agreement (other than the Tax Indemnity
Agreement) shall prove to have been incorrect in any material respect when
made and shall remain material at the time in question and shall not be
remedied within 30 days after notice thereof has been given to the Lessee
by the Lessor or the Indenture Trustee, unless such incorrectness is
curable and Lessee shall, after delivery of such notice, be diligently
proceeding to correct such failure and shall in fact correct such failure
180 days after the delivery of such notice;
(f) The Lessee shall consent to the appointment of or taking
possession by a receiver, assignee, custodian, sequestrator, trustee or
liquidator (or other similar official) of itself or of a substantial part
of its property, or the Lessee shall admit in writing its inability to pay
its debts generally as they come due (as provided in 11 U.S.C. ss.
303(h)(1)), or shall make a general assignment for the benefit of its
creditors, or the Lessee shall file a voluntary petition in bankruptcy or
a voluntary petition or answer seeking liquidation, reorganization or
other relief with respect to itself or its debts under the Federal
bankruptcy laws, as now or hereafter constituted or any other applicable
Federal or State bankruptcy, insolvency or other similar law or shall
consent to the entry of an order for relief in an involuntary case under
any such law or the Lessee shall file an answer admitting the material
allegations of a petition filed against the Lessee in any such proceeding,
or otherwise seek relief under the provisions of any now existing or
future Federal or State bankruptcy, insolvency or other similar law
providing for the reorganization or winding-up of corporations, or
providing for an agreement, composition, extension or adjustment with its
creditors;
(g) An order, judgment or decree shall be entered in any proceedings
by any court of competent jurisdiction appointing, without the consent of
the
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Lessee, a receiver, trustee or liquidator of the Lessee or of any
substantial part of its property, or any substantial part of the property
of the Lessee shall be sequestered, and any such order, judgment of decree
of appointment or sequestration shall remain in force undismissed,
unstayed or unvacated for a period of 90 days after the date of entry
thereof; or
(h) A petition against the Lessee in a proceeding under the Federal
bankruptcy laws or other insolvency laws as now or hereafter in effect
shall be filed and shall not be withdrawn or dismissed within 90 days
thereafter, or, under the provisions of any law providing for
reorganization or winding-up of corporations which may apply to the
Lessee, any court of competent jurisdiction shall assume jurisdiction,
custody or control of the Lessee or of any substantial part of its
property and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of 90 days;
provided that, notwithstanding anything to the contrary contained in this Lease,
any failure of the Lessee to perform or observe any covenant, condition, or
agreement herein shall not constitute an Event of Default under clause (d) above
if such failure is caused solely by reason of an event referred to in the
definition of "Event of Loss" so long as the Lessee is continuing to comply with
the applicable terms of Section 8.
Section 17. Remedies.
Upon the occurrence of any Event of Default and at any time
thereafter so long as the same shall be continuing, the Lessor may, at its
option, declare this Lease to be in default by a notice to the Lessee (provided
that this Lease shall be deemed to have been declared in default without the
necessity of such notice upon the occurrence of any Event of Default described
in paragraph (f), (g) or (h) of Section 16 hereof); and at any time thereafter
so long as the Lessee shall not have remedied all outstanding Events of Default,
the Lessor may do, and the Lessee shall comply with, one or more of the
following with respect to the Airframe and all or any part of the Engines, as
the Lessor in its sole discretion shall elect, to the extent permitted by, and
subject to compliance with any mandatory requirements of, Applicable Law then in
effect; provided that during any period the Aircraft is subject to the Civil
Reserve Air Fleet Program in accordance with the provisions of Section 5(b) and
in the possession of the United States government or an instrumentality or
agency thereof, the Lessor shall not, on account of any Event of Default, be
entitled to do any of the following in such manner as to limit the Lessee's
control under this Lease (or any sublessee's control under any sublease
permitted by the terms of this Lease) of any Airframe or any Engines, unless at
least 60 days' (or such lesser period, if any, as may then be applicable under
the Military Airlift Command Program of the United States Government) prior
notice of default hereunder shall have been given by the Lessor by registered or
certified mail to the Lessee (or any sublessee) with a copy addressed to the
Contracting Office Representative for the Military Airlift Command of the United
States Air Force under any contract with Lessee (or any sublessee) relating to
the Aircraft:
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(a) Cause the Lessee, upon the written demand of the Lessor and at
the Lessee's expense to, and the Lessee shall, promptly return the
Airframe and all or such part of the Engines as the Lessor may demand to
the Lessor in the manner and condition required by, and otherwise in
accordance with all of the provisions of, Section 12 as if the Airframe
and such Engines were being returned at the end of the Term; or the
Lessor, at its option, may cause public officials acting pursuant to
judicial order obtained in summary proceedings or otherwise to enter upon
the premises where the Airframe or any or all Engines are located or
reasonably believed to be located and take immediate possession of and
remove such Airframe or Engines, and the Lessee shall comply therewith,
all without liability to the Lessor for or by reason of such entry or
taking possession, whether for the restoration of damage to property
caused by such taking or otherwise; and the Lessee shall promptly execute
and deliver to the Lessor such instruments of title or other documents as
the Lessor may deem necessary or advisable to enable the Lessor or its
agent to obtain possession of the Airframe or the Engines, provided that
if the Lessee shall for any reason fail to execute and deliver such
instruments and documents after such request, the Lessor shall be
entitled, in a proceeding to which the Lessee shall be a necessary party,
to a judgment for specific performance, conferring the right to immediate
possession upon the Lessor and requiring the Lessee to execute and deliver
such instruments and documents to the Lessor;
(b) Sell or otherwise dispose of the Aircraft, at public or private
sale, as the Lessor may determine, or hold, use, operate, lease to others
or keep idle all or any part of the Airframe or any Engine as the Lessor,
in its sole discretion, may determine, in any such case free and clear of
any rights of the Lessee except as hereinafter set forth in this Section
17 and without any duty to account to the Lessee with respect to such
action or inaction or for any proceeds with respect thereto except to the
extent required by paragraph (d) below in the event the Lessor elects to
exercise its rights under said paragraph in lieu of its rights under
paragraph (c) below;
(c) Whether or not the Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) above with respect to the Aircraft, the Lessor, by written
notice to the Lessee specifying a payment date not earlier than 10 days
from the date of such notice, may cause the Lessee to pay to the Lessor,
and the Lessee shall pay to the Lessor, on the payment date specified in
such notice, as liquidated damages for loss of a bargain and not as a
penalty, any installment of Basic Rent due on or before such payment date
plus an amount equal to the excess, if any, of (i) Termination Value for
the Aircraft, determined as of such payment date over (ii) the Fair Market
Sales Value for the Aircraft, computed as of the payment date specified
pursuant to this paragraph (c), together with interest, to the extent
permitted by Applicable Law, at the Past Due Rate on the amount of such
excess, if any, from such payment date specified pursuant to this
paragraph (c), to the date of actual payment of such amount;
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(d) In the event the Lessor, pursuant to paragraph (b) above, shall
have sold the Aircraft upon reasonable notice to the Lessee, the Lessor in
lieu of exercising its rights under paragraph (c) above with respect to
the Aircraft, may, if it shall so elect, cause the Lessee to pay the
Lessor, and the Lessee shall pay to the Lessor, on the date of such sale,
as liquidated damages for loss of a bargain and not as a penalty (in lieu
of the Basic Rent due after the date on which such sale occurs but in
addition to any installment of Basic Rent due on or up to the date on
which such sale occurs), the amount of any deficiency of the net proceeds
of such sale below the Termination Value of the Aircraft, determined as of
the date of such sale, together with interest, to the extent permitted by
Applicable Law, at the Past Due Rate on the amount of such deficiency from
the date as of which such Termination Value is determined to the date of
actual payment; and
(e) Rescind this Lease or exercise any other right or remedy which
may be available under Applicable Law or proceed by appropriate court
action to enforce the terms hereof or to recover damages for the breach
hereof.
In addition, the Lessee shall be liable for any unpaid Supplemental Rent due
hereunder before or after any termination hereof, including all reasonable costs
and expenses including attorney's fees and disbursements incurred by reason of
the occurrence of any Event of Default or the exercise of the Lessor's remedies
with respect thereto including without limitation all costs and expenses
incurred in connection with the return of the Airframe or any Engine in
accordance with, and in the condition required by, the terms of Section 12 or
any appraisal of the Aircraft required for purposes of this Section 17. At any
sale of the Aircraft, the Airframe or any Engine, or portion thereof pursuant to
this Section 17, the Lessor may bid for and purchase such property. Except as
otherwise expressly provided above, no remedy referred to in this Section 17 is
intended to be exclusive (but the liquidation of damages provided in this
Section 17 shall be exclusive to the extent permitted by Applicable Law), but
each shall be cumulative and in addition to any other remedy referred to above
or otherwise available to the Lessor for the Event of Default at law or in
equity; and the exercise or beginning of exercise by the Lessor of any one or
more of such remedies shall not preclude the simultaneous or later exercise by
the Lessor of any or all such other remedies. No express or implied waiver by
the Lessor of any Event of Default hereunder shall in any way be, or be
construed to be, a waiver of any future or subsequent Event of Default.
Section 18. Lessor's Right to Perform for the Lessee.
If the Lessee fails to make any payment of Rent required to be made
by it hereunder or fails to perform or comply with any of its agreements
contained herein the Lessor may, upon prior notice to the Lessee, itself make
such payment or perform or comply with such agreement, and the amount of such
payment and the amount of the reasonable expenses of the Lessor incurred in
connection with such payment or the performance of or compliance with such
agreement, as the case may be, together with interest thereon at the Past Due
Rate, shall be deemed Supplemental Rent, payable by
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the Lessee upon demand; provided, that nothing in this Section 18 shall be
deemed to permit the Lessor to exercise any control over the operation or
maintenance of the Aircraft or any part thereof while it is being utilized in
the air transportation services of the Lessee or any permitted sublessee without
the consent of the Lessee.
Section 19. Bankruptcy.
It is the intention of the parties that the Lessor (and the
Indenture Trustee as assignee of the Lessor under the Indenture) shall be
entitled to the benefits of 11 U.S.C. ss. 1110 with respect to the right to
repossess the Airframe, Engines and Parts as provided herein, and in any
circumstances where more than one construction of the terms and conditions of
this Lease is possible, a construction which would preserve such benefits shall
control over any construction which would not preserve such benefits or would
render them doubtful. To the extent consistent with the provisions of 11 U.S.C.
ss. 1110 or any analogous section of the Federal bankruptcy laws, as amended
from time to time, it is hereby expressly agreed and provided that,
notwithstanding any other provisions of the Federal bankruptcy laws, as amended
from time to time, any right of the Lessor to take possession of the Aircraft in
compliance with the provisions of this Lease shall not be affected by the
provisions of 11 U.S.C. ss. 362 or 363, as amended from time to time, or any
analogous provisions of any superseding statute or any power of the bankruptcy
court to enjoin such taking of possession.
Section 20. Assignment: Benefit and Binding Effect.
(a) Assignment by the Lessee.
The Lessee may not, without the prior written consent of the Lessor,
assign any of its rights hereunder except as otherwise expressly provided
herein.
(b) Assignment by the Lessor.
The Lessor's interest in this Lease has been assigned as security to
the Indenture Trustee pursuant to the Indenture for the benefit of the holders
from time to time of the Certificates, and the Lessee acknowledges due notice
of, and consents to, such security assignment. The Lessor may not, without the
prior consent of the Lessee, otherwise assign any of its rights under or
interest in this Lease except to a successor Owner Trustee or additional trustee
referred to in Section 22(a) hereof or as otherwise expressly provided herein.
(c) Benefit and Binding Effect.
The terms and provisions of this Lease shall be binding upon and,
subject to the limitations on assignment of rights hereunder, inure to the
benefit of the Lessor and the Lessee and their respective successors and
permitted assigns. Nothing herein shall be construed as creating rights in any
other Person. In no event shall any of the
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representations, warranties or agreements of the Lessee herein or in the
Participation Agreement be assignable to or inure to the benefit of or be
enforceable by or on behalf of any Person which, whether as purchaser or lessee
or otherwise, conducts flight or ground operations with the Aircraft or any part
thereof at any time following the Term.
(d) Sublessee's Performance and Rights.
Any obligation imposed on the Lessee in this Lease shall require
only that the Lessee perform or cause to be performed such obligation, even if
stated herein as a direct obligation, and the performance of any such obligation
by any sublessee or transferee of the Airframe or any Engine or Part permitted
by the terms hereof under a sublease or transfer agreement then in effect shall
constitute performance by the Lessee and to the extent of such performance
discharge such obligation by the Lessee. Except as otherwise expressly provided
herein, any right granted to the Lessee in this Lease shall grant the Lessee the
right to exercise such right or permit such right to be exercised by any such
sublessee or transferee. The inclusion of specific references to obligations or
rights of any such sublessee or transferee in certain provisions of this Lease
shall not in any way prevent or diminish the application of the provisions of
the two sentences immediately preceding with respect to obligations or rights in
respect of which specific reference to any such sublessee or transferee has not
been made in this Lease.
Section 21. Owner Trustee's Limitation on Liability.
Trust Company is entering into this Lease solely as Owner Trustee
under the Trust Agreement and not in its individual capacity and neither Trust
Company nor any entity acting as successor Owner Trustee or additional Owner
Trustee under the Trust Agreement shall be personally liable for, or for any
loss in respect of, any of the statements, representations, warranties,
agreements or obligations stated to be those of the Lessor hereunder, as to
which all interested parties shall look solely to the Trust Estate, except to
the extent expressly provided otherwise in the other Operative Agreement,
provided, however, that nothing in this Section 21 shall be construed to limit
in scope or substance the liability of Trust Company or any entity acting as
successor Owner Trustee or additional Owner Trustee under the Trust Agreement in
its individual capacity for the consequences of its own willful misconduct or
gross negligence or (in receiving, handling or remitting funds) its simple
negligence, or the inaccuracy or breach of its representations, warranties or
covenants made in such capacity in any other Operative Agreement.
Section 22. Certain Agreements of Lessee.
The Lessee will take, or cause to be taken, at the Lessee's cost and
expense, such action with respect to the recording, filing, re-recording and
re-filing of this Lease, each Lease Supplement, the Trust Agreement, the
Indenture, each Indenture Supplement and any financing statements or other
instruments as are necessary or requested by the Owner Participant or the
Indenture Trustee and appropriate, to
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maintain, so long as the Indenture or this Lease is in effect, the perfection of
the security interest created by the Indenture and any security interest that
may be claimed to have been created by this Lease and the ownership interest of
the Owner Trustee in the Aircraft, and will furnish to the Owner Trustee, the
Indenture Trustee and the Owner Participant timely notice of the necessity of
such action, together with such instruments, in execution form, and such other
information as may be required to enable them to take such action.
Section 23. Miscellaneous.
(a) Notices.
Except as otherwise specifically provided herein, all notices,
requests, approvals or consents required or permitted by the terms hereof shall
be in writing (it being understood that the specification of a writing in
certain instances and not in others does not imply an intention that a writing
is not required as to the latter). Any notice shall be effective when received.
Any notice shall either be mailed, certified or registered mail, return receipt
requested with proper first class postage prepaid, or sent in the form of a
telex, telegram or telecopy, or by overnight delivery service or delivered by
hand. Any notice shall be directed to the Lessee, the Lessor, the Indenture
Trustee or any other party to the Participation Agreement to the respective
addresses set forth in Section 12.01 to the Participation Agreement or to such
other address or telex or telecopy number as any such party may designate
pursuant to Section 14.01 of the Participation Agreement.
(b) Counterparts.
This Lease may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall, subject to the
next sentence and the legends appearing on the cover and signature page hereof,
be an original, but all such counterparts shall together constitute but one and
the same instrument. TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL
PAPER (AS THE TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY
APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS LEASE MAY BE CREATED
THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL
COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE INDENTURE TRUSTEE ON
THE SIGNATURE PAGE THEREOF.
(c) Amendments.
Neither this Lease nor any of the terms hereof may be terminated,
amended, supplemented, waived or modified orally, but only by an instrument in
writing signed by the Lessor and the Lessee provided, however, that unless and
until the Lessee shall have received written notice from the Indenture Trustee
that the Indenture has been discharged, except as otherwise provided in the
Indenture, no
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termination, amendment, supplement, waiver or modification of, or waiver by or
consent of the Lessor in respect of, any of the provisions of this Lease shall
be effective unless the Indenture Trustee shall have joined in such amendment,
modification, waiver or consent or shall have given its prior consent thereto.
(d) Agreement to Lease.
This Lease shall constitute an agreement of lease, and nothing
contained herein shall be construed as conveying to the Lessee any right, title
or interest in the Aircraft except as a lessee only.
(e) Governing Law.
THIS LEASE SHALL IN ALL RESPECTS BE GOVERNED BY THE LAW OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
THIS LEASE HAS BEEN DELIVERED IN THE STATE OF NEW YORK.
* * *
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IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease to be duly executed by their authorized officers as of the day and year
first above written.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
not in its individual
capacity, but solely
as Owner Trustee
By:____________________________
Name:
Title:
MIDWAY AIRLINES CORPORATION
By:____________________________
Name:
Title:
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[Leased Aircraft
Definitions]
APPENDIX A
DEFINITIONS [N______]
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (as defined below), unless otherwise
defined in an Operative Agreement or the context thereof shall otherwise
require. In the case of any conflict between the provisions of this Appendix and
the provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean such agreements as amended and supplemented from time to
time, and (ii) references to parties to agreements shall be deemed to include
the successors and permitted assigns of such parties.
"Additional Insureds" means the Owner Trustee (in its individual and trust
capacities), the Owner Participant, the Indenture Trustee (in its individual and
trust capacities) and each Liquidity Provider.
"Aeronautics Authority" means as of any time of determination, the FAA or
other governmental airworthiness authority having jurisdiction over the Aircraft
or the Airframe and Engines or engines attached thereto under the laws of the
country in which the Airframe is then registered.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling 50% or more of any class of voting securities of such
Person or otherwise controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract or
otherwise.
"After Tax Basis" means a basis such that any payment to be received by a
Person shall be supplemented by a further payment to such Person so that the sum
of the two payments, after deduction of all Taxes (taking into account any
related credits or deductions) resulting from the receipt or accrual of such
payments, shall be equal to the payment to be received.
"Aircraft" means the Airframe together with the Engines, whether or not
any of the Engines may at the time of determination be installed on the Airframe
or installed on any other airframe or on any other aircraft.
"Airframe" means (i) the Canadair Regional Jet Series 200ER aircraft
(excluding the Engines and any other engines which may from time to time be
installed thereon, but including any and all Parts which may from time to time
be incorporated in, installed on or attached to such aircraft, and including any
and all such Parts removed therefrom so long as title to such removed Parts
remains vested in the Lessor under the terms of Section 7 of the Lease)
originally delivered and leased under the Lease, identified by national
registration number and manufacturer's serial number in the Lease Supplement
executed and delivered on the Delivery Date, so long as a Replacement Airframe
shall not have been substituted therefor pursuant to Section 8 of the Lease, and
(ii) a Replacement Airframe, so long as another Replacement Airframe shall not
have been substituted therefor pursuant to Section 8 of the Lease.
"Applicable Law" means all applicable laws, treaties, judgments, decrees,
injunctions, writs and orders of any court, governmental agency or authority and
rules, regulations, orders, directives, licenses and permits of any governmental
body, instrumentality, agency or authority.
"Average Life Date" means, for any Equipment Note, the date which follows
the prepayment date by a period equal to the Remaining Weighted Average Life of
such Equipment Note.
"Bankruptcy Code" means Title 11 of the United States Code, as amended,
and any successor thereto.
"Basic Rent" means the rent payable on Basic Rent Payment Dates throughout
the Basic Term for the Aircraft pursuant to Section 3(b) of the Lease and rent
payable during any Renewal Term pursuant to Section 13(a) of the Lease.
"Basic Rent Payment Date" means each date listed under the heading "Basic
Rent Payment Date" in Exhibit C to the Lease.
"Basic Term" means the period commencing at the beginning of the day on
the Delivery Date and ending at end of the day on the Expiration Date, or such
earlier date on which the Lease shall be terminated as provided therein.
"Beneficial Interest" means the interest of the Owner Participant under
the Trust Agreement.
"Business Day" means any day other than a Saturday or Sunday on which
commercial banks are not authorized or required to close in New York City,
Charlotte, North Carolina and the city in the United States in which the office
or agency is
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maintained by the Pass-Through Trustee for the payment of the Pass-Through
Certificates, and after the Lien of the Indenture is discharged, Wilmington,
Delaware.
"Change in Tax Law" means any change or proposed change in the Code or the
Regulations or any change in the interpretation of the Code or Regulations or
any change in the interpretation of the Code or Regulations in a decision by the
United States Supreme Court, the United States Tax Court, the United States
Court of Claims or any one of the United States Courts of Appeals, or any
issuance of a revenue ruling, revenue procedure or any pronouncement by the
Internal Revenue Service or the Department of the Treasury.
"Citizen of the United States" means a citizen of the United States as
defined in ss. 40102(a)(15) of the Transportation Code, or any analogous part of
any successor or substituted legislation or regulation at the time in effect.
"Class A Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class B Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class C Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any similar legislation of the United States enacted to supersede,
amend, or supplement such Code (and any reference to a provision of the Code
shall refer to any successor provision(s), however designated).
"Commitment" of a Loan Participant shall have the meaning given such term
in Section 2(d) of the Participation Agreement; "Commitment" of the Owner
Participant shall have the meaning given such term in Section 2(c) of the
Participation Agreement.
"CRAF Program" has the meaning specified in Section 5(b)(vii) of the
Lease.
"DOT" means the U.S. Department of Transportation or any successor
thereto.
"Debt Rate" means the weighted average (based on Outstanding principal
amount) rate of interest on the Equipment Notes.
"Default" means any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
"Delivery Date" means the date on which the Aircraft is delivered and sold
to the Lessor and leased by the Lessor to the Lessee under the Lease, which date
shall be the date of the initial Lease Supplement.
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"Deposit Agreement" means each of the four Deposit Agreements between the
Depositary and the Escrow Agent, dated as of the Issuance Date, each of which
relates to one of the Pass-Through Trusts.
"Depositary" means First Union National Bank, as Depositary under each
Deposit Agreement.
"Dollars" means dollars in lawful currency of the United States.
"Downgrade Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"EBO Date" has the meaning given to such term in Exhibit B to the Lease.
"EBO Price" has the meaning given to such term in Exhibit B to the Lease.
"Engine" means (A) one of the two CF34-3B1 Series 200 engines originally
delivered and leased under the Lease, identified by manufacturer's serial number
in the Lease Supplement executed and delivered on the Delivery Date, so long as
a Replacement Engine shall not have been substituted therefor pursuant to
Section 7(e) of the Lease, and (B) a Replacement Engine, so long as another
Replacement Engine shall not have been substituted therefor pursuant to Section
7(e) of the Lease, whether or not such engine or Replacement Engine, as the case
may be, is from time to time installed on the Airframe or installed on any other
aircraft, and including in each case all Parts incorporated or installed in or
attached thereto and any and all Parts removed therefrom so long as title to
such Parts remains vested in the Lessor under the terms of Section 7 of the
Lease. The term "Engines" means, as of any date of determination, the two
engines each of which is an Engine on that date.
"Engine Manufacturer's Consent" means any consent to the Engine Warranty
Assignment delivered by the manufacturer of the Engines on the Delivery Date and
pertaining to the Aircraft.
"Engine Warranty Assignment" means any engine warranty assignment
agreement, in form and substance reasonably acceptable to the Owner Participant
entered into by the Lessor and the Lessee on the Delivery Date.
"Equipment Notes" means the Equipment Notes issued by the Owner Trustee
pursuant to the Indenture and any equipment note issued in exchange therefor or
replacement thereof pursuant to the Indenture.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means First Union Trust Company, National Association, as
Escrow Agent under each of the Escrow Agreements.
-4-
"Escrow Agreement" means each of the four Escrow and Paying Agent
Agreements, among the Escrow Agent, the Paying Agent, certain initial purchasers
of the Pass-Through Certificates named therein and one of the Pass-Through
Trustees, dated as of the Issuance Date, each of which relates to one of the
Pass Through Trusts.
"Event of Default" has the meaning given to such term in Section 17 of the
Lease.
"Event of Loss" means any of the following events with respect to the
Aircraft, the Airframe or any Engine:
(i) theft or disappearance for a period in excess of 90 consecutive
days;
(ii) destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use for any reason whatsoever;
(iii) any event which results in an insurance settlement with
respect to such property on the basis of an actual, constructive or
compromised total loss;
(iv) condemnation, confiscation or seizure of, or requisition of
title to or use of such property by any foreign government (or in the case
of any such requisition of title, by the Government) or any agency or
instrumentality thereof, for a period in excess of 180 consecutive days
(or 30 consecutive days for the appropriation of title), or, in any of the
cases in this clause (iv), such shorter period ending on the expiration of
the Term;
(v) condemnation, confiscation or seizure of, or requisition of use
of such property by the Government for a period extending beyond the Term,
provided that no Event of Loss shall be deemed to have occurred, and the
term of the Lease shall be extended automatically for a period of six
months in the event that the Aircraft is requisitioned by the Government
pursuant to an activation under the CRAF Program; and
(vi) as a result of any law, rule, regulation, order or other action
by the Aeronautics Authority, the use of the Aircraft or Airframe in the
normal course of air transportation shall have been prohibited by virtue
of a condition affecting all Canadair Regional Jet Series 200ER aircraft
equipped with engines of the same make and model as the Engines for a
period of 180 consecutive days (or beyond the end of the Term), unless the
Lessee, prior to the expiration of such 180-day period, shall be
diligently carrying forward all necessary and desirable steps to permit
normal use of the Aircraft and shall within 12 months have conformed at
least one Canadair Regional Jet Series 200ER aircraft (but not necessarily
the Aircraft) to the requirements of any such law, rule, regulation, order
or action, and shall be diligently pursuing conformance of the Aircraft in
a non-discriminatory manner.
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The date of such Event of Loss shall be (aa) the 91st day following loss of such
property or its use due to theft or disappearance (or the end of the Term if
earlier); (bb) the date of any destruction, damage beyond economic repair or
rendition of such property permanently unfit for normal use; (cc) the date of
any insurance settlement on the basis of an actual, constructive or compromised
total loss; (dd) the 181st day following condemnation, confiscation, seizure or
requisition of title to or use of such property by a foreign government referred
to in clause (iv) above (or the 31st day in the case of appropriation of title,
or the end of the Term if earlier than such 181st or 31st day); (ee) the last
day of the Term (as automatically extended by six months in the case of an
activation under the CRAF Program) in the case of requisition of title to or use
of such property by the Government; and (if) the last day of the applicable
period referred to in clause (vi) above (or if earlier, the end of the Term
without the Lessee's having conformed at least one Canadair Regional Jet Series
200ER aircraft to the applicable requirements). An Event of Loss with respect to
the Aircraft shall be deemed to have occurred if any Event of Loss occurs with
respect to the Airframe.
"Excepted Payments" means collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of the
Owner Participant, the Owner Trustee in its individual capacity or any of their
respective successors, permitted assigns, directors, officers, employees,
servants and agents or Affiliates, pursuant to the Participation Agreement or
any other Operative Agreement or any indemnity hereafter granted to the Owner
Participant or the Owner Trustee in its individual capacity pursuant to the
Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the Aircraft
payable as a result of insurance claims paid for the benefit of, or losses
suffered by, the Owner Trustee or the Indenture Trustee in their respective
individual capacities or by the Owner Participant, or their respective
successors, permitted assigns or Affiliates, (iii) proceeds of insurance
maintained with respect to the Aircraft by the Owner Participant or any
Affiliate thereof (whether directly or through the Owner Trustee) in accordance
with Section 9(f) of the Lease, (iv) payments by the Lessee in respect of any
amounts payable under the Tax Indemnity Agreement, (v) any purchase price paid
to the Owner Participant for its interest in the Trust Estate, (vi) subject to
Section 3(f) of the Lease, payments constituting increases in Basic Rent
attributable to payments arising pursuant to the Tax Indemnity Agreement, (vii)
any payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above, (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described in
clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
"Expenses" has the meaning given to such term in Section 7.01(a) of the
Participation Agreement.
"Expiration Date" means the date specified as such in the Lease Supplement
executed and delivered on the Delivery Date.
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"FAA Xxxx of Sale" means the xxxx of sale for the Airframe on AC Form
8050-2, or such other form as may be approved by the Aeronautics Authority,
executed in favor of the Owner Trustee and to be dated the Delivery Date.
"Fair Market Rental Value" or "Fair Market Sales Value" of the Airframe or
any Engine shall mean the value that would be obtained in an arms'-length
transaction between an informed and willing lessee-user or buyer-user (other
than a lessee currently in possession or a used equipment dealer) under no
compulsion to lease or buy, as the case may be, and an informed and willing
lessor or seller, as the case may be, under no compulsion to lease or sell, as
the same shall be specified by agreement between the Lessor and the Lessee or,
if not agreed to by the Lessor and the Lessee within a period of 15 days after
either party requests a determination, then as specified in an appraisal
prepared and delivered in New York City mutually agreed to by two recognized
independent aircraft appraisers, one of which shall be appointed by the Lessor
and the other of which shall be appointed by the Lessee, or, if such appraisers
cannot agree on such appraisal, an appraisal arrived at by a third independent
recognized appraiser chosen by the mutual consent of the two aircraft
appraisers. If either party should fail to appoint an appraiser within 15 days
of receiving notice of the appointment of an appraiser by the other party, then
such appraisal shall be made by the appraiser appointed by the first party. If
the two appraisers cannot agree on such appraisal and fail to appoint a third
independent recognized aircraft appraiser within 15 days after the appointment
of the second appraiser, then either party may apply to the American Arbitration
Association to make such appointment. The appraisal shall be completed within 30
days of the appointment of the last appraiser appointed. In determining Fair
Market Rental Value or Fair Market Sales Value by appraisal or otherwise, it
will be assumed that the Aircraft, Airframe or Engine is in the condition,
location and overhaul status in which it is required to be returned to the
Lessor pursuant to Section 12 of the Lease (except that a determination of Fair
Market Sales Value pursuant to Section 17 of the Lease shall be based on "as is,
where is" condition), that the Lessee has removed all Parts which it is entitled
to remove pursuant to Section 7 of the Lease and that the Aircraft is encumbered
by the Lease. For purposes of the preceding sentence and with respect to a
purchase of the Aircraft pursuant to Section 13(b) of the Lease, "encumbered by
the Lease" shall mean, with respect to Fair Market Sales Value, the Fair Market
Sales Value increased or decreased to reflect the benefits and burdens of the
Lease and other Operative Documents. Except as otherwise expressly provided in
the Lease, all appraisal costs will be shared equally by the Lessor and the
Lessee.
"Federal Aviation Administration" or "FAA" means the United States Federal
Aviation Administration and any successor agency or agencies thereto.
"Final Drawing" has the meaning given to such term in Section 1.01 of the
Intercreditor Agreement.
"Fixed Renewal Term" has the meaning given to such term in Section 13(a)
of the Lease.
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"FNBM" means The First National Bank of Maryland, a national banking
association.
"Government means the United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
"Holder" means, as of any particular time, the Person in whose name a
Equipment Note shall be registered.
"Indemnitee" means each of Trust Company, in its individual capacity and
as Owner Trustee, the Subordination Agent, in its individual capacity and in its
capacity as Subordination Agent, each Liquidity Provider, the Owner Participant,
the Indenture Trustee, in its individual capacity and as trustee, the Escrow
Agent, the Paying Agent, the Pass Through Trustees and each Affiliate, officer,
director, employee, agent and servant of any of the foregoing Persons. No holder
of a Pass-Through Certificate shall be deemed to be an Indemnitee.
"Indenture" means the Trust Indenture and Security Agreement [N_______],
dated as of ______________ __, 199_, between the Owner Trustee and the Indenture
Trustee.
"Indenture Default" means any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
"Indenture Documents" has the meaning specified in the Granting Clause of
the Indenture.
"Indenture Event of Default" means each of the events specified in Section
7.01 of the Indenture.
"Indenture Indemnitee" means (i) the Indenture Trustee and each separate
or additional trustee appointed pursuant to the Indenture, (ii) the Escrow
Agent, (iii) the Subordination Agent, (iv) each Liquidity Provider, (v) the
Paying Agent, (vi) each Pass-Through Trustee and (vii) each of the respective
directors, officers, employees, agents and servants of each of the persons
described in clauses (i) through (vi).
"Indenture Supplement" means (a) the Trust Indenture and Security
Agreement Supplement No. 1, substantially in the form of Exhibit A to the
Indenture, which shall describe with particularity the Aircraft included in the
property of the Owner Trustee covered by the Indenture by reference to the Lease
Supplement, and which creates a first priority security interest in the Aircraft
and (b) any other supplement to the Indenture from time to time executed and
delivered.
"Indenture Trustee" means The First National Bank of Maryland, a national
banking association, as indenture trustee under the Operative Documents.
-8-
"Indenture Trustee's Liens" means any Lien against, on or with respect to
the Aircraft, any Engine, the Lessor's Estate or the Trust Indenture Estate or
any part thereof resulting from (i) claims against the Indenture Trustee not
related to the administration of the Trust Indenture Estate or any transactions
pursuant to the Indenture or any document included in the Trust Indenture
Estate, (ii) any act or omission of the Indenture Trustee which is not related
to the transactions contemplated by the Operative Agreements or is in violation
of any of the terms of the Operative Agreements, or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the Lessee
has not indemnified (and is not obligated to indemnify) the Indenture Trustee in
such capacity.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Lessee that is independent in
fact, does not have any direct financial interests, or any material indirect
financial interest, in the Lessee or any Affiliate of the Lessee, and is not
connected with the Lessee or any Affiliate of the Lessee, as an officer,
employee, promoter, underwriter, trustee, partner, director or Person performing
similar functions; provided, that if the Indenture Trustee shall not have
received written notice of such an appointment at least 10 days prior to the
Prepayment Date, "Independent Investment Banker" shall mean such an institution
appointed by the Indenture Trustee.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
August 13, 1998, among the Pass Through Trustees, the Class A Liquidity
Provider, the Class B Liquidity Provider, the Class C Liquidity Provider and the
Subordination Agent.
"Interest Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Issuance Date" means August 13, 1998.
"Lease" means the Lease Agreement [N______], dated as of ______ _____,
199_ between the Owner Trustee and the Lessee.
"Lease Supplement" means any Lease Supplement, substantially in the form
of Exhibit A to the Lease, entered into between the Lessor and the Lessee for
the purpose of leasing the Aircraft under and pursuant to the terms of the
Lease, including any amendment thereto entered into subsequent to the Delivery
Date.
"Lessee" means Midway Airlines Corporation, a Delaware corporation.
"Lessee Documents" means (x) the Operative Agreements to which the Lessee
is a party and (y) the Pass-Through Trust Agreements.
"Lessor" means First Union Trust Company, National Association, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement.
-9-
"Lessor's Cost" has the meaning given to such term in Exhibit B of the
Lease.
"Lessor's Estate" means all estate, right, title and interest of the Owner
Trustee in and to the Aircraft, and Engines and the Operative Agreements (other
than the Tax Indemnity Agreement) including, without limitation, all amounts of
Rent, insurance proceeds and requisition, indemnity or other payments of any
kind, but specifically excluding any Excepted Payments.
"Lessor's Liens" means Liens against, on or with respect to the Aircraft,
any Engine, the Lessor's Estate or the Trust Indenture Estate or any part
thereof, title thereto or any interest therein arising as a result of (i) claims
against or affecting the Lessor, in its individual capacity or as Owner Trustee,
or the Owner Participant, in each case not related to the Operative Agreements
or the transactions contemplated thereby, (ii) acts or omissions of the Lessor
in its individual capacity or as Owner Trustee, or of the Owner Participant not
contemplated or permitted under the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to Articles 6 or 7 of the Participation Agreement and which are not
required to be indemnified against by the Lessee pursuant to the Tax Indemnity
Agreement, or (iv) claims against the Lessor, in its individual capacity or as
Owner Trustee, or the Owner Participant arising from the transfer by the Lessor
or the Owner Participant of its interests in the Aircraft or any Engine other
than a transfer of the Aircraft pursuant to Section 5(b), 7(e), 13(b), 14(a) or
17 of the Lease and other than a transfer pursuant to the exercise of the
remedies set forth in Section 17 of the Lease.
"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
security interest, claim, or other similar interest of any nature whatsoever.
"Liquidity Facility" means each of the three Irrevocable Revolving Credit
Agreements (consisting of a separate Revolving Credit Agreement with the
Liquidity Provider with respect to each Pass-Through Trust) between the
Subordination Agent, as borrower, and the Liquidity Provider, each dated as of
the Issuance Date.
"Liquidity Provider" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Loan Participant" means and includes each registered holder from time to
time of an Equipment Note issued under the Indenture including, so long as it
holds any Equipment Notes issued under the Indenture, the Pass-Through Trustee
under each Pass-Through Trust Agreement.
"Majority in Interest of Holders" means, as of a particular date of
determination, the Holders of more than 50% of the aggregate unpaid principal
amount of all Equipment Notes Outstanding as of such date.
-10-
"Make-Whole Premium" means with respect to any Equipment Note, an amount
determined as of the day before the applicable Prepayment Date (or date of
purchase, as the case may be) which an Independent Investment Banker determines
to be equal to the excess, if any, of (i) the present value of the remaining
scheduled payments of such principal amount or portion thereof and interest
thereon to the maturity date of such Equipment Note assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield (in the case of the Series A Equipment Notes and Series B Equipment Notes)
and the Treasury Yield plus .50% (in the case of the Series C Equipment Notes
and the Series D Equipment Notes) over (ii) the outstanding principal amount of
such Equipment Note plus accrued interest (other than any overdue portion
thereof).
"Manufacturer" means Bombardier, Inc., a Canadian corporation.
"Minimum Liability Amount" has the meaning given to such term in Exhibit B
to the Lease.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Non-U.S. Person" means any Person other than a U.S. Person.
"Note Purchase Agreement" means the Note Purchase Agreement, dated as of
the Issuance Date, among the Lessee, the Subordination Agent, the Escrow Agent,
the Paying Agent and the Pass-Through Trustee under each Pass-Through Trust
Agreement providing for, among other things, the issuance and sale of certain
equipment notes.
"Offering Memo" means the Lessee's August 6, 1998 Offering Memorandum
concerning the Pass-Through Certificates.
"Officer's Certificate" means, when delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner Trustee,
as the case may be, and delivered to the Indenture Trustee. Each such
certificate shall include the statements provided for in Section 15.07 of the
Indenture.
"Operative Agreements" means the Participation Agreement, the Trust
Agreement, the FAA Xxxx of Sale, the Warranty Xxxx of Sale, the Purchase
Agreement, the Purchase Agreement Assignment, the Engine Warranty Assignment,
the PAA Consent, the Lease, each Lease Supplement, any Owner Participant
Guaranty, the Equipment Notes outstanding at the time of reference, the
Indenture, each Indenture Supplement and the Tax Indemnity Agreement.
"Opinion of Counsel" means when delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the Lessee
may be (i) an attorney employed by the Lessee who is generally empowered to
deliver such written opinions, (ii) Fulbright & Xxxxxxxx L.L.P., or (iii) other
counsel designated by the
-11-
Lessee and reasonably satisfactory to the Indenture Trustee, and (b) for the
Owner Trustee or the Indenture Trustee, an attorney selected by such Person and
reasonably satisfactory to the Lessee and, in the case of the Owner Trustee,
reasonably satisfactory to the Indenture Trustee.
"Outstanding" means, when used with respect to Equipment Notes, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Equipment Notes theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Equipment Notes theretofore canceled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Equipment Notes for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee in
trust for the Holders of such Equipment Notes pursuant to Section
14.01 of the Indenture; provided that if such Equipment Notes are to
be prepaid, notice of such prepayment has been duly given pursuant
to the Indenture or provision therefor satisfactory to the Indenture
Trustee has been made; and
(iii) Equipment Notes in exchange for or in lieu of which other
Equipment Notes have been executed and delivered pursuant to Article
II of the Indenture.
"Owner Participant" means _________________, a _________________.
"Owner Participant Guarantor" means the provider of an Owner Participant
Guaranty.
"Owner Participant Guaranty" means any guaranty delivered to support the
obligations of the Owner Participation under the Operative Agreements in
connection with the transfer by the Owner Participant of the Beneficial
Interest.
"Owner Trustee" means Trust Company, not in its individual capacity except
as otherwise expressly stated, but solely as trustee under the Trust Agreement.
"PAA Consent" means any consent to the Purchase Agreement Assignment
delivered by the Manufacturer on the Delivery Date and pertaining to the
Aircraft.
"Participants" means, collectively, the Owner Participant and the
Pass-Through Trustee with respect to each of the Pass-Through Trust Agreements;
"Participant" means, individually, one of the Participants.
-12-
"Participation Agreement" the Participation Agreement [N________], dated
as of __________ __, 199_, among the Lessee, the Owner Trustee not in its
individual capacity except as otherwise expressly provided therein, but solely
as owner trustee, the Owner Participant, the Indenture Trustee, the Pass-Through
Trustees and the Subordination Agent.
"Parts" means any and all appliances, parts, instruments, appurtenances,
accessories, furnishings, seats, and other equipment of whatever nature (other
than Engines or engines and temporary replacement parts as provided in Section 8
of the Lease and cargo containers) which may from time to time be incorporated
or installed in or attached to any Airframe or any Engine, exclusive of any
items leased by the Lessee from third parties and not required in the navigation
of the Aircraft.
"Pass-Through Certificates" means any of the Pass-Through Certificates,
1998-1A, the Pass-Through Certificates, 1998-1B, the Pass-Through Certificates,
1998-1C or the Pass Through Certificates, 1998-1D, in each case as issued by the
related Pass-Through Trust; and "Pass-Through Certificates" means all of such
Pass-Through Certificates.
"Pass-Through Documents" means the Pass-Through Trust Agreements, the
Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement and
the Liquidity Facilities.
"Pass-Through Trust" means the Midway Airlines 1998-1 Pass-Through Trust
Class A, Midway Airlines 1998-1 Pass-Through Trust Class B, Midway Airlines
1998-1 Pass-Through Trust Class C and Midway Airlines 1998-1 Pass-Through
Trust-Class D, in each case formed pursuant to the related Series Supplement in
accordance with the Pass-Through Trust Agreement; and "Pass-Through Trusts"
means all of such Pass-Through Trusts.
"Pass-Through Trust Agreement" means each of the four Pass-Through Trust
Agreements dated as of August 13, 1998 among the Lessee and the Pass-Through
Trustee (which shall include each Successor Pass-Through Trust Agreement entered
into pursuant to Section 11.01 of each thereof).
"Pass-Through Trustee" The First National Bank of Maryland, a national
banking association, in its capacity as Pass-Through Trustee under each
Pass-Through Trust Agreement.
"Past Due Rate" means in respect of any principal of or interest on or any
other amounts payable in respect of any Equipment Note that is not paid when due
to any Holder, a rate per annum during the period from and including the due
date to but excluding the date on which such amount is paid in full equal to 1%
plus the interest rate applicable to such Equipment Note.
-13-
"Payment Date" means each January 2 and July 2, commencing on _________ 2,
199_.
"Permitted Air Carrier" means (a) any Section 1110 Person and (b) any
foreign air carrier that is principally based in any foreign country listed on
Exhibit E to the Lease, except those that do not maintain normal diplomatic
relations with the United States.
"Permitted Investments" means (a) direct obligations of the United States
of America or any agency or instrumentality thereof, (b) obligations fully
guaranteed by the United States of America or any agency or instrumentality
thereof, (c) any mutual fund the portfolio of which is limited to obligations of
the type described in clauses (a) and (b), including any proprietary mutual fund
of The First National Bank of Maryland for which such bank or an affiliate is
investment advisor or to which such bank provides other services and receives
reasonable compensation for such services, (d) certificates of deposit issued
by, or bankers' acceptances of, or time deposits or a deposit account with, any
bank, trust company, or national banking association incorporated or doing
business under the laws of the United States of America or one of the states
thereof, having a combined capital and surplus of at least $100,000,000 and
having a rating of "A" or better from the Xxxxx Bank Watch Service, (e)
commercial paper issued by companies in the United States which directly issue
their own commercial paper and which are doing business under the laws of the
United States of America or one of the states thereof and in each case having a
rating assigned to such commercial paper by a nationally recognized rating
organization in the United States of America equal to the highest rating
assigned by such organization, or (f) obligations of the type described in
clauses (a), (b), (d), or (e) above, purchased from any bank, trust company, or
banking association referred to in clause (d) above pursuant to repurchase
agreements obligating such bank, trust company, or banking association to
repurchase any such obligation not later than 30 days after the purchase of any
such obligation. Unless otherwise specified in writing by the Owner Trustee, all
such Permitted Investments shall mature not later than 30 days from the date of
purchase.
"Permitted Lien" has the meaning given to such term in Section 10 of the
Lease.
"Permitted Sublessee" means (a) any Permitted Air Carrier or (b) any
airframe or engine manufacturer, or Affiliate of such a manufacturer, who is
domiciled in the United States of America or a country listed on Exhibit E to
the Lease.
"Person" means any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
"Placement Agents" means Xxxxxx Xxxxxxx & Co. Incorporated and Credit
Suisse First Boston.
-14-
"Placement Agreement" means the Purchase Agreement dated August 6, 1998
among the Lessee and the Placement Agents.
"Prepayment Date" has the meaning given to such term in Section 6.02(b) of
the Indenture.
"Prepayment Price" has the meaning given to such term in Section 6.02(b)
of the Indenture.
"Purchase Agreement" means Bombardier Regional Aircraft Division Purchase
Agreement No. PA-0393 dated September 17, 1997, as amended, between the Company
and the Manufacturer (including all exhibits thereto, together with all letter
agreements entered into that by their terms constitute part of any such Purchase
Agreement).
"Purchase Agreement Assignment" means the Purchase Agreement and Engine
Warranties Assignment [N ____], dated as of even date with the Participation
Agreement, between Lessee and Owner Trustee.
"Purchase Price" means an amount equal to Lessor's Cost.
"Rating Agency" means Moody's or S&P, as the context requires.
"Record Date" means, with respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 15 for January 2
Payment Dates and June 15 for July 2 Payment Dates, whether or not such date is
a Business Day.
"Recourse Amount" has the meaning given to such term in Section 15.07 of
the Participation Agreement.
"Refinancing" means a non-recourse loan to the Lessor arranged pursuant to
Section 13.01 of the Participation Agreement.
"Register" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registrar" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registration Rights Agreement" means the Exchange and Registration Rights
Agreement, dated as of August 13, 1998, among the Placement Agents, FNBM, as
Pass-Through Trustee, and the Lessee.
"Registration Rights Event" has the meaning given to such term in the
Registration Rights Agreement.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and supplemented
and in effect from time to time.
-15-
"Remaining Weighted Average Life" means on a given date with respect to
any Equipment Note the number of days equal to the quotient obtained by dividing
(i) the sum of each of the products obtained by multiplying (a) the amount of
each then remaining scheduled payment of principal of such Equipment Note by (b)
the number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Equipment Note.
"Renewal Term" has the meaning given to such term in Section 13(a) of the
Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Rent Payment Date" means each Payment Date during the Term.
"Replacement Aircraft" means any Aircraft of which a Replacement Airframe
is part.
"Replacement Airframe" means a Canadair Regional Jet Series 200ER series
aircraft or a comparable or improved model of such aircraft of the Manufacturer
(except Engines or engines from time to time installed thereon) which shall have
become subject to the Lease pursuant to Section 8 thereof.
"Replacement Closing Date" has the meaning given such term in Section 8(d)
of the Lease.
"Replacement Engine" means a CF34-3B1 Series 200 engine (or engine of the
same or another manufacturer of a comparable or an improved model and suitable
for installation and use on the Airframe), and which shall have become subject
to the Lease pursuant to Section 7(e) thereof.
"Responsible Officer" means, with respect to the Owner Trustee or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate officer
of a party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant, agreement
or obligation of such party pursuant to any Operative Agreement, would have
responsibility for and knowledge of such matter and the requirements of any
Operative Agreement with respect thereto.
"S&P" means Standard & Poor's Ratings Group.
"SEC" means the Securities and Exchange Commission of the United States
and any successor agencies or authorities.
-16-
"Section 1110 Person" means a Citizen of the United States who is an
air carrier holding a valid air carrier operating certificate issued pursuant
to 49 U.S.C. ch. 447 for aircraft capable of carrying 10 or more individuals.
"Secured Obligations" has the meaning specified in the Granting Clause of
the Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Series "A" or "Series A Equipment Notes" means the Equipment Notes issued
and designated as "Series A" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series A".
"Series "B" or "Series B Equipment Notes" means the Equipment Notes issued
and designated as "Series B" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series B".
"Series "C" or "Series C Equipment Notes" means the Equipment Notes issued
and designated as "Series C" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series C".
"Series "D" or "Series D Equipment Notes" means the Equipment Notes issued
and designated as "Series D" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series D".
"Specified Default" means (a) an event or condition described in Section
16(a), (f), (g) or (h) of the Lease that, after the giving of notice or lapse of
time, or both, would mature into an Event of Default, or (b) any Event of
Default.
"Specified Investments" means (a) direct obligations of the United States
of America or obligations fully guaranteed by the United States of America; (b)
any mutual fund the portfolio of which is limited to obligations of the type
described in clause (a), including any proprietary mutual fund of The First
National Bank of Maryland for which such bank or an affiliate is investment
advisor or to which such bank provides other services and receives reasonable
compensation for such services; (c) commercial paper rated A-1/P-1 by S&P and
Moody's, respectively or, if such ratings are unavailable, rated by any
nationally recognized rating organization in the United States equal to the
highest rating assigned by such rating organization; (d) investments in
negotiable certificates of deposit, time deposits, banker's acceptances,
commercial paper or other direct obligations of, or obligations guaranteed by,
commercial banks organized under the laws of the United States or of any
political subdivision thereof (or any U.S. branch of a foreign bank) with issuer
ratings of at least B/C by Thomson
-17-
Bankwatch, having maturities no later than 90 days following the date of such
investment; (e) overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers; or (f) overnight repurchase
agreements with respect to the securities described in clause (a) above entered
into with an office of a bank or trust company which is located in the United
States of America or any bank or trust company which is organized under the laws
of the United States or any state thereof and has capital, surplus and undivided
profits aggregating at least $500 million.
"Sublease" means any sublease agreement between the Lessee and a Permitted
Sublessee as permitted by Section 5(b) of the Lease.
"Subordination Agent" means The First National Bank of Maryland, a
national banking association, in its capacity as Subordination Agent.
"Subsequent Renewal Term" has the meaning given to such term in Section
13(a) of the Lease.
"Supplemental Rent" means (a) all amounts, liabilities and obligations
which the Lessee assumes or agrees to perform or pay under the Lease or under
the Participation Agreement or Tax Indemnity Agreement or any other Operative
Agreement to the Lessor, the Owner Participant, the Indenture Trustee, the
Subordination Agent, any Liquidity Provider or others, including payments of
Termination Value, EBO Price, and amounts calculated by reference to Termination
Value, any amounts of Make-Whole Premium payable under the Indenture to the
extent provided in Section 3(c) of the Lease, and all amounts required to be
paid by Lessee under the agreements, covenants, and indemnities contained in the
Lease or in the Participation Agreement or the Tax Indemnity Agreement or any
other Operative Agreement, but excluding Basic Rent, and (b) all amounts that
the Owner Trustee is obligated to pay in accordance with clause (b) of the last
paragraph of Section 2.04 of the Indenture.
"Tax" or "Taxes" has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
"Tax Indemnitee" means each of Trust Company, individually and as Owner
Trustee, the Owner Participant and the Indenture Trustee.
"Tax Indemnity Agreement" the Tax Indemnity Agreement to be entered into
by the Lessee and the Owner Participant on the Delivery Date.
"Term" has the meaning given to such term in Section 3(a) of the Lease.
"Termination Date" means each date listed in the column entitled
"Termination Date" in Exhibit D to the Lease.
-18-
"Termination Value" means (a) as of any Termination Date during the Basic
Term, the amount determined as set forth in Exhibit C to the Lease for that
Termination Date, and (b) during any Renewal Term, the amount for the date
involved, determined in accordance with Section 13(a) of the Lease, in either
case adjusted as required by Section 3(d) of the Lease.
"Transaction Costs" means those costs and expenses set forth in Section
8.01(a) of the Participation Agreement to be borne by the Owner Participant.
"Transportation Code" means Title 49 of the United States Code, subtitle
VII, as amended and in effect on the date of the Lease or as subsequently
amended, or any successor or substituted legislation at the time in effect and
applicable, and the regulations promulgated pursuant thereto.
"Treasury Yield" means, at the time of determination with respect to any
Equipment Note, the interest rate (expressed as a semi-annual equivalent and as
a decimal and, in the case of United States Treasury bills, converted to a bond
equivalent yield) determined to be the per annum rate equal to the semi-annual
yield to maturity for United States Treasury securities maturing on the Average
Life Date on such Equipment Note and trading in the public securities markets
either as determined by interpolation between the most recent weekly average
yield to maturity for two series of United States Treasury securities, trading
in public securities markets, (i) one maturing as close as possible to, but
earlier than, the Average Life Date of such Certificate and (ii) the other
maturing as close as possible to, but later than, the Average Life Date of such
Equipment Note, in each case as published in the most recent H. 15(519) or, if a
weekly average yield to maturity for United States Treasury securities maturing
on the Average Life Date of such Equipment Note is reported on the most recent
H. 15(519), such weekly average yield to maturity as published in such
H.15(519). "H.15(519)" means the weekly statistical release designated as such,
or any successor publication, published by the Board of Governors of the Federal
Reserve System. The date of determination of a Make-Whole Premium will be the
third Business Day prior to the applicable prepayment date and the "most recent
H.15(519)" means the H. 15(519) published prior to the close of business on the
third Business Day prior to the applicable prepayment date.
"Trust Agreement" means the Trust Agreement [N____] dated as of _________
__, between the Owner Participant and Trust Company.
"Trust Company" means First Union Trust Company, National Association.
"Trust Estate" means the Lessor's Estate.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
-00-
"Xxxxx Xxxxxxxxx Xxxxxx" means all estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interest, and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of the
Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee
or the Owner Participant pursuant to the Indenture.
"United States", "U.S." or "US" means the United States of America.
"U.S. Person" means a Person described in ss. 7701(a)(30) of the Code.
"Warranty Xxxx of Sale" means the full warranty xxxx of sale covering the
Aircraft (and specifically referring to each Engine) executed by the owner of
the Aircraft in favor of the Owner Trustee and to be dated the Delivery Date.
-20-
Exhibit A
to Lease
LEASE SUPPLEMENT NO.
THIS LEASE SUPPLEMENT No. ____ dated _______________, 19__, between
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual capacity,
but solely as Owner Trustee, except as otherwise provided herein, the Lessor,
and MIDWAY AIRLINES CORPORATION, a Delaware corporation, the Lessee;
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have heretofore entered into that
certain Lease Agreement, dated as of ______________ (the "Lease", the terms
defined therein being herein used with the same meaning), which Lease provides,
among other things, for the execution and delivery of Lease Supplements in
substantially the form hereof for the purpose of leasing a specific Aircraft
under the Lease when delivered by the Lessor to the Lessee in accordance with
the terms thereof;
WHEREAS, the Lease, a counterpart of which is attached hereto and
made a part hereof, relates to the Aircraft and Engines described in Schedule I
hereto and this Lease Supplement, together with such attachment, is being filed
for recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, and pursuant to Section 2 of the Lease, the Lessor and
the Lessee hereby agree as follows:
1. The Lessor hereby delivers and leases to the Lessee, and the
Lessee hereby accepts and leases from the Lessor, under the Lease as herein
supplemented, the Aircraft, described in Schedule I hereto.
2. The Delivery Date is the date of this Lease Supplement set forth
in the opening paragraph hereof.
3. The Basic Term shall commence on the Delivery Date and continue
through ___________ (the "Expiration Date"), unless terminated earlier as
provided in the Lease.
4. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
5. This Lease Supplement may be executed by the parties hereto in
separate counterparts and all such counterparts shall together constitute but
one and the same instrument. To the extent, if any, that this Lease Supplement
constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction), no security interest in this Lease
Supplement or the Lease may be created through the transfer or possession of any
counterpart other than the original counterpart of each thereof containing the
receipt therefor executed by the Indenture Trustee on the signature page of each
thereof.
6. THIS LEASE SUPPLEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK
AND SHALL IN ALL RESPECTS BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease Supplement to be duly executed by their authorized officers as of the day
and year first above written.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
not in its individual
capacity, but solely as
Owner Trustee
By:_____________________________
Name:
Title:
MIDWAY AIRLINES CORPORATION
By:_____________________________
Name:
Title:
THE LESSOR HAS ASSIGNED THIS LEASE SUPPLEMENT TO THE INDENTURE
TRUSTEE AS SECURITY. TO THE EXTENT, IF ANY, THAT THIS LEASE SUPPLEMENT
CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL
CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS
LEASE SUPPLEMENT MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY
COUNTERPART HEREOF OTHER THAN THE ORIGINAL COUNTERPART CONTAINING THE RECEIPT
THEREFOR EXECUTED BY THE INDENTURE TRUSTEE IMMEDIATELY FOLLOWING THIS LEGEND.
Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ___ day of ___________, 199__.
THE FIRST NATIONAL BANK OF
MARYLAND, as Indenture Trustee
By:______________________________
Name:
Title:
SCHEDULE I
TO EXHIBIT A
DESCRIPTION OF AIRFRAME AND ENGINES
AIRFRAME
Manufacturer's FAA Registration Manufacturer's
Manufacturer Model No. Serial No.
------------ -------------- ---------------- -------------
ENGINES
Manufacturer's Manufacturer's
Manufacturer Model Serial Nos.
------------ -------------- ----------------
Each Engine is of 750 or more "rated take-off horsepower" or the
equivalent of such horsepower.
Exhibit B
Certain Economic Information
"EBO Amount" shall mean $____________.
"EBO Date" shall mean _________________ ____.
"Lessor's Cost" shall mean $___________.
"Minimum Liability Amount" shall mean $________.
Exhibit C
Basic Rent
Basic Rent Payment Date Amount
----------------------- ------
Exhibit D
Termination Values
Termination Date Termination Value
---------------- -----------------
Exhibit E
Lists of Countries
Exhibit E-1 - Permitted for Re-Registration
Australia Italy
Austria Japan
Belgium Luxembourg
Canada Netherlands
Denmark New Zealand
Finland Spain
France Sweden
Germany Switzerland
Greece United Kingdom
Iceland
Ireland
Exhibit E-2 - Permitted for Subleasing
Argentina Iceland
Australia Ireland
Austria Italy
Belgium Jamaica
Bermuda Japan
Brazil Liechtenstein
Canada Netherlands
Chile Norway
Denmark Portugal
Finland Singapore
France Spain
Germany Sweden
Switzerland
Taiwan
United Kingdom
Exhibit F
Return Conditions
The return conditions shall be as agreed to by the Lessee and the Owner
Participant on or prior to the Delivery Date.
Exhibit A-2 to
Leased Aircraft
Participation Agreement
[F&J LEASED AIRCRAFT OPINION]
[Delivery Date]
To Each of the Parties Listed
on the Attached Schedule
Re: Lease Financing of One Canadair Regional Jet
Series 200ER Aircraft -- U.S. Registration No. N
Ladies and Gentlemen:
We have acted as special New York counsel for Midway Airlines Corporation,
a Delaware corporation (the "Lessee"), in connection with the Participation
Agreement dated as of _____________________, among the Lessee;
______________________________, as Owner Participant; First Union Trust Company,
National Association ("FUTC"), as Owner Trustee; and The First National Bank of
Maryland ("FNBM"), as Indenture Trustee, Pass Through Trustee and Subordination
Agent. Capitalized terms used herein and not otherwise defined herein shall have
the meanings set forth or referred to in the Participation Agreement. For
purposes hereof, "Documents" shall be a collective reference to the
Participation Agreement, the Lease, Lease Supplement No. 1, Purchase Agreement
Assignment and the Tax Indemnity Agreement.
This opinion is furnished to you pursuant to Section 3.01(b)(xviii)(B) of
the Participation Agreement.
In rendering this opinion, we have examined the Documents and such other
Operative Documents as are necessary in order to give the opinions expressed
herein. We have further examined and relied upon the accuracy of original,
certified, conformed, photographic or telecopied copies of such records,
agreements, certificates, certificates of public officials and such other
documents, and have made an investigation of such laws, as we have deemed
necessary and appropriate for the purpose of rendering this opinion. As to
certain questions of fact material to our opinions, we have relied solely upon
the accuracy of the statements, representations and warranties made in the
Documents and such other Operative Documents and we have made no independent
investigation or inquiry with respect to such factual matters.
Based on the foregoing and upon an examination of such questions of law as
we have considered necessary or appropriate, and subject to the assumptions,
exceptions, qualifications and limitations set forth below, we advise you that
in our opinion:
1. Each of the Documents constitutes a legal, valid and binding obligation
of the Lessee, enforceable against the Lessee in accordance with its terms.
2. The execution and delivery by the Lessee of the Documents, the
consummation by the Lessee of the transactions contemplated thereby and the
compliance by the Lessee with any of the terms and provisions thereof do not
contravene any applicable federal law of the United States or any applicable law
of New York.
3. Except for the filings with the FAA referred to in paragraph 4 below,
the execution and delivery by the Lessee of the Documents and the consummation
by the Lessee of the transactions contemplated thereby do not require the
consent or approval of, or the giving of notice to, or the registration,
recording or filing of any document with, or the taking of any other action with
respect to any authority or agency of the federal government of the United
States of America or the State of New York.
4. The Lease as supplemented by Lease Supplement No. 1 thereto and the
Indenture as supplemented by Indenture Supplement No. 1 thereto are in due form
for filing in accordance with Subtitle VII of Title 49 of the United States Code
(the "Act"). The Indenture as supplemented by Indenture Supplement No. 1 thereto
will create, for the benefit of the Indenture Trustee, a valid security interest
in the Indenture Estate identified therein. Except for the filings with the FAA
referred to in the opinion dated today and addressed to you of Xxxxx & Xxxxxxx,
the filing of the Uniform Commercial Code financing statements referenced in
Section ___ of the Participation Agreement, which filings we assume have been
duly effected and are adequate for their intended purpose (and subject to the
timely filings in the future of continuation statements with respect to such
financing statements), and the taking of possession by the Indenture Trustee of
the original of the Lease and Lease Supplement No. 1, each with a chattel paper
receipt attached, no recording or filing in the United States of America of any
of the Operative Documents, nor any other action, is necessary or advisable in
order to establish and perfect in the United States of America, the Owner
Trustee's rights and interest in the applicable Aircraft as against the Lessee
or any third party, or the mortgage and security interest of the Indenture
Trustee under the Indenture on the Aircraft, the Lease or the other property
included in the Indenture Estate in favor of the Indenture Trustee as against
the Lessee, the Owner Trustee or any third party.
5. The Participation Agreement, the Indenture and the Equipment Notes (the
"Owner Trustee Instruments") constitute legal, valid and binding obligations of
FUTC, to the extent any of such Owner Trustee Instruments were entered into by
FUTC in its individual capacity, and the Owner Trustee, or both, as the case may
be, enforceable against FUTC or the Owner Trustee, or both, as the case may be,
in
-2-
accordance with the terms of such agreements, and the Equipment Notes are
entitled to the benefits of the Indenture.
6. The Participation Agreement and the Indenture (the "Indenture Trustee
Documents") constitute legal, valid and binding obligations of the Indenture
Trustee, enforceable against the Indenture Trustee in accordance with their
respective terms.
7. The Participation Agreement constitutes the legal, valid and binding
obligation of the Pass Through Trustee, enforceable against the Pass Through
Trustee in accordance with its terms.
8. The Participation Agreement constitutes the legal, valid and binding
obligation of the Subordination Agent, enforceable against the Subordination
Agent in accordance with its terms.
9. So long as the Lessee continues to be a "citizen of the United States,"
as defined in Section 40102 of Title 49 of the United States Code, holding an
air carrier operating certificate issued by the Secretary of Transportation
pursuant to Chapter 447 of Title 49 of the United States Code for aircraft
capable of carrying 10 or more individuals or 6,000 pounds or more of cargo, the
Owner Trustee, as lessor under the Lease, and the Indenture Trustee, as assignee
of the Owner Trustee's rights under the Lease pursuant to the Indenture, would
be entitled to the benefits of Section 1110 of the Bankruptcy Code ("Section
1110") with respect to the Aircraft.
We call your attention that the U.S. District Court for the District of
Colorado recently issued an opinion regarding Section 1110, In re Western
Pacific Airlines, Civil Action Xx. 00-X- 000 (X. Colo. Mar. 10 and affirmed on
rehearing May 1, 1998). The decision, reversing an order of the bankruptcy
court, held that, although an airline debtor reaffirms its obligations and cures
its defaults under an aircraft lease within the prescribed period in accordance
with Section 1110, the protections under Section 1110 will cease after the first
sixty days in a chapter 11 case. An appeal from the decision of the District
Court is pending in the Court of Appeals for the Tenth Circuit. We have filed a
brief in the Tenth Circuit on behalf of another client seeking to overturn the
District Court's ruling. Although we are of the opinion that the decision of the
District Court was in error and that the protections of Section 1110, generally
speaking, should continue after the first sixty days in chapter 11, we can give
no assurance that the decision of the District Court will be reversed.
The foregoing opinions are subject to the following assumptions,
exceptions, qualifications and limitations:
A. The foregoing opinions are expressly limited to matters under and
governed by the internal laws of the State of New York and applicable federal
laws of the United States of America, except that we express no opinion as to
the securities law of any state, including the State of New York. Our opinion in
paragraph 2 above as to the contravention of certain laws, rules and regulations
is based upon such examination
-3-
of laws and regulations as in our judgment was necessary and appropriate for the
purpose of such opinion.
B. The foregoing opinions regarding the enforceability of the Operative
Documents against any of the parties thereto are subject to the following:
(i) The enforceability of any of the Operative Documents may be
limited or affected by (a) bankruptcy, insolvency,
reorganization, moratorium, liquidation, rearrangement,
probate, conservatorship, fraudulent transfer, fraudulent
conveyance and other similar laws (including court decisions)
now or hereafter in effect and affecting the rights and
remedies of creditors generally or providing for the relief of
debtors, (b) the refusal of a particular court to grant (1)
equitable remedies, including, without limiting the generality
of the foregoing, specific performance and injunctive relief
or (2) a particular remedy sought by the Owner Trustee under
the Lease or by the Indenture Trustee under the Indenture as
opposed to another remedy provided for therein or another
remedy available at law or in equity, but which does not in
our opinion make such remedies inadequate for the practical
realization of the benefits intended to be provided thereby
and (c) general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(ii) In rendering the foregoing opinions, we express no opinion as
to the enforceability of provisions of any of the Operative
Documents (a) purporting to waive or affect rights, claims,
defenses or other benefits bestowed by law, including without
limitation the right to receive notices, to the extent that
any of the same cannot be waived or affected or (b) relating
to indemnities to the extent prohibited by public policy or
limited by federal or state securities laws or which might
require indemnification for losses or expenses caused by gross
negligence, willful misconduct, fraud or illegality of an
indemnified party, the rights of third parties, or the
exercise of rights and remedies with respect to the Aircraft
other than in a commercially reasonable manner or as otherwise
provided in the Uniform Commercial Code or other applicable
law.
(iii) We note that the enforceability of specific provisions of the
Operative Documents may be subject to standards of
reasonableness, care and diligence and "good faith"
limitations and obligations such as those provided in Sections
1-102(3) and 1-203, of the Uniform Commercial Code and similar
applicable principles of common law and judicial decisions.
-4-
(iv) We express no opinion with respect to compliance with the
anti-fraud provisions of applicable federal rules or
regulations.
C. With respect to the opinion given in paragraph 4 above as to the
creation of a security interest in the Indenture Estate, we express no opinion
as to the creation of any security interest in any portion of the Indenture
Estate other than (I) that portion of the Indenture Estate consisting of the
Aircraft, (II) that portion of the Indenture Estate (except for the Aircraft)
which is not excluded by Section 9-104 of the Uniform Commercial Code of any
relevant jurisdiction and (III) if possession or control and dominion or both by
the Indenture Trustee is required or necessary, such portion of the Indenture
Estate as has been deposited with the Indenture Trustee pursuant to the
Indenture, or which possession or control and dominion or both, has otherwise
effectively occurred.
D. The foregoing opinions, to the extent they address the creation and
perfection of a security interest in any portion of the Indenture Estate are
further subject to the following: we have made no examination of, and we express
no opinion as to, (a) the title of any person to the Indenture Estate or any
portion thereof, (b) the value of any security granted to the Indenture Trustee
and (c) the priority of any such security interest.
E. We have assumed the due authorization, execution and delivery of the
Operative Documents by each of the parties thereto (including the Lessee) and
that each of such parties has the full power, authority and legal right to
execute, deliver and perform such documents.
F. Except to the extent expressly set forth in paragraphs 1, 5, 6, 7 and
8, we have assumed that each of the Operative Documents is enforceable against
each of the parties thereto.
G. With respect to the opinion given in paragraph 5, our opinion is
subject to limitations of Delaware law applicable to FUTC and the Owner Trustee,
as to which we express no opinion.
H. With respect to the opinions given in paragraphs 6, 7 and 8 our opinion
is subject to limitations of Maryland law applicable to FNBM or the Indenture
Trustee, Pass Through Trustee or Subordination Agent, as the case may be, as to
which we express no opinion.
I. We have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals and the conformity to the originals
of all documents submitted to us as copies, which facts we have not verified
independently.
J. We express no opinion as to whether the Lease constitutes a "true
lease."
-5-
K. We have assumed that the Operative Documents and the transactions
contemplated thereby are not within the prohibitions of Section 406 of the
Employee Retirement Income Security Act of 1974.
L. With respect to the opinion given in paragraph 9, we express no opinion
as to the availability of the benefits of Section 1110 of the Bankruptcy Code to
any Replacement Aircraft or Replacement Engine.
M. In giving the foregoing opinion, we have relied upon the opinions
delivered to you today of Xxxxx & Xxxxxxx with respect to the matters set forth
therein. Our opinion is subject to all applicable qualifications and exceptions
(except for those set forth in clauses (i) (subject however to paragraph A
above) and (ii) thereof set forth in such opinion.
The opinions expressed herein are solely for the benefit of, and may only
be relied upon by, the named addressees in connection with the transactions
contemplated by the Participation Agreement. This opinion may not be furnished
or relied upon by any other person without the prior written consent of this
Firm. The opinions expressed herein are as of the date hereof and we make no
undertaking to amend or supplement such opinions as facts and circumstances come
to our attention or changes in the law occur which could affect such opinions.
Very truly yours,
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Schedule of Addresses
[Owner Participant]
First Union Trust Company, National Association,
individually and as Owner Trustee
The First National Bank of Maryland,
as Indenture Trustee, Pass Through
Trustee and Subordination Agent
ABN AMRO Bank N.V.
Standard & Poor's Rating Services
Exhibit A-3 to
Leased Aircraft
Participation Agreement
[FNBM Leased Aircraft Opinion]
_______________, 199_
To the Persons Listed in Schedule A Attached Hereto
Re: Midway Airlines Corporation
Financing of One Canadair
Regional Jet Aircraft Series 200ER Aircraft
U.S. Registration No. N___________
Gentlemen:
We have acted as special counsel to The First National Bank of Maryland,
national banking association ("First National"), in connection with the
Participation Agreement [N______], dated as of _____________, 199__ (the
"Participation Agreement"), among Midway Airlines Corporation, as Lessee,
______________________, not in its individual capacity (except as expressly set
forth therein) but solely as Owner Trustee, and First National, not in its
individual capacity (except as expressly set forth therein) but solely as
Indenture Trustee, as Pass-Through Trustee and as Subordination Agent. Pursuant
to the Participation Agreement, one Canadair Regional Jet Series 200ER Aircraft
bearing U.S. Registration No. N_________ (the "Aircraft") is being financed.
This opinion is furnished pursuant to Section 3.01(b)(xviii)(F) of the
Participation Agreement Capitalized terms used herein and not defined have the
meanings given to such terms in the Participation Agreement, except that
references herein to any instrument shall mean such instrument as in effect on
the date hereof.
We have examined executed counterparts or copies otherwise identified to
our satisfaction of the following documents:
(a) the Participation Agreement;
____________, 199_
Page 2
(b) the Indenture; and
(c) the Equipment Notes
(each of the documents identified in paragraphs (a) through (c) above are
collectively referred to as the "Indenture Trustee's Documents").
We have also examined originals or copies of such other documents, such
corporate records, certificates and other statements of governmental officials
and corporate officers and other representatives of the corporations or entities
referred to herein and such other instruments as we have deemed necessary or
appropriate for the purposes of this opinion. Moreover, as to certain facts
material to the opinions expressed herein, we have relied upon representations
and warranties contained in the Indenture Trustee's Documents.
In basing the opinions and other matters set forth herein on "our
knowledge", the words "our knowledge" signify that, in the course of our review
and analysis for the purpose of rendering this opinion, no information has come
to our attention that would give us actual knowledge or actual notice that any
such opinions or other matters are not accurate or that any of the foregoing
documents, records, certificates, statements and information on which we have
relied are not accurate and complete. Except as otherwise stated herein, we have
undertaken no independent investigation or verification of such matters. The
words "our knowledge" and similar language used herein are intended to be
limited to the knowledge of the lawyers within our firm who have worked on
matters relating to this opinion letter.
Based upon the foregoing and upon an examination of such questions of law
as we have considered necessary or appropriate, and subject to the assumptions,
exceptions and qualifications set forth below, we advise you that, in our
opinion:
1. First National is a national banking association duly incorporated and
validly existing under the laws of the United States of America holding a valid
certificate to do business as a national banking association, with banking and
trust powers, and each of First National and the Indenture Trustee, as the case
may be, has or had, on the date of execution thereof, full corporate power,
authority and legal right to execute, deliver and perform its duties pursuant to
each of the Indenture Trustee's Documents to which it is or is to be a party and
to authenticate the Equipment Notes delivered on the date hereof.
2. Each of First National and the Indenture Trustee, as the case may be,
has duly authorized, executed and delivered each Indenture Trustee Document to
which it is a party; each such document constitutes a legal, valid and binding
obligation of the Indenture Trustee (and, to the extent set forth in the
respective Indenture Trustee's Documents, of First National) enforceable against
the Indenture Trustee (and, to the extent set forth in the respective Indenture
Trustee's Documents, against First National) in accordance with its terms.
____________, 199_
Page 3
3. The Equipment Notes issued and dated the date hereof have been duly
authenticated and delivered by the Indenture Trustee pursuant to the terms of
the Indenture.
4. Neither the authorization, execution and delivery by the Indenture
Trustee or First National, as the case may be, of the Indenture Trustee's
Documents, nor the authentication and delivery by the Indenture Trustee of the
Equipment Notes nor the fulfillment or compliance by the Indenture Trustee or
First National, as the case may be, with the respective terms and provisions
thereof nor the consummation of any of the transactions by the Indenture Trustee
or First National, as the case may be, contemplated thereby, requires the
consent or approval of, the giving of notice to, the registration with, or the
taking of any other action in respect of, any court or administrative or
governmental authority or agency of the State of Maryland or the United States
of America governing the banking or trust powers of First National.
5. The execution, delivery and performance by the Indenture Trustee or
First National, as the case may be, of each of the Indenture Trustee's Documents
and the authentication and delivery of the Equipment Notes by the Indenture
Trustee are not in violation of the articles of association or by-laws of First
National or of any law, governmental rule, or regulation of the State of
Maryland or the United States of America governing the banking or trust powers
of First National or, to our knowledge, of any indenture, mortgage, bank credit
agreement, note or bond purchase agreement, long-term lease, license or other
agreement or instrument to which it is a party or by which it is bound that is
material to the Indenture Trustee or First National or, to our knowledge, of any
judgment or order of the State of Maryland or the United States of America
relating to the banking or trust powers of First National.
6. There are no fees, taxes or other governmental charges payable by the
Owner Trustee, the Indenture Trustee (except taxes imposed on fees payable to
First National) or the holders of the Equipment Notes to the State of Maryland
or any political subdivision thereof under the laws of the State of Maryland or
any political subdivision thereof in existence on the date hereof, in connection
with the execution, delivery or performance of any of the Operative Agreements
solely because First National (a) has its principal place of business in the
State of Maryland, (b) performs (in its individual capacity or as Indenture
Trustee) any or all of its duties under the Indenture Trustee's Documents in the
State of Maryland, and (c) engages in any activities unrelated to the
transactions contemplated by the Indenture Trustee's Documents in the State of
Maryland. Neither the Indenture Trustee nor the trust created under the
Indenture will be subject to any fee, tax or other governmental charge (except
for taxes imposed on fees payable to First National) under the laws of the State
of Maryland or any political subdivision thereof in existence on the date
hereof, on, based on or measured by, directly or indirectly, the gross receipts,
net income or value of the Trust Indenture Estate solely because First National
(a) has its principal place of business in the State of Maryland, (b) performs
(in its individual capacity or as Indenture Trustee) any or all of its duties
under the Indenture Trustee's Documents in the State of Maryland, and (c)
engages in any activities
____________, 199_
Page 4
unrelated to the transactions contemplated by the Indenture Trustee's Documents
in the State of Maryland. There is no fee, tax or other governmental charges
(except for taxes imposed on fees payable to First National) under the laws of
the State of Maryland or any political subdivision thereof in existence on the
date hereof, on, based on or measured by any payments under the Equipment Notes
by reason of the creation of the trust under the Indenture solely because First
National (a) has its principal place of business in the State of Maryland, (b)
performs (in its individual capacity or as Indenture Trustee) any or all of its
duties under the Indenture Trustee's Documents in the State of Maryland, and (c)
engages in any activities unrelated to the transactions contemplated by the
Indenture Trustee's Documents in the State of Maryland. We express no opinion as
to whether or not any fees, taxes or other charges are now or hereafter may be
payable by the Owner Participant to the State of Maryland or any political
subdivision thereof in connection with (a) the execution, delivery or
performance by the Owner Participant of any of the Indenture, the Participation
Agreement or any of the other Operative Agreements, and (b) the making by the
Owner Participant of its investment in the Aircraft.
7. To our knowledge, there are no actions, suits, investigations or
proceedings pending or threatened against or affecting First National or the
Indenture Trustee, as the case may be, or any of its properties in any court or
before any administrative agency or arbitrator, which, if adversely determined,
would materially adversely affect the ability of First National or the Indenture
Trustee, as the case may be, to perform its obligations under any of the
Indenture Trustee's Documents, and to our knowledge, there are no pending or
threatened actions or proceedings before any court, administrative agency or
tribunal involving First National or the Indenture Trustee, as the case may be,
in connection with the transactions contemplated by any of the Indenture
Trustee's Documents.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. We are admitted to practice law in the State of Maryland and we do not
hold ourselves out as being experts on the laws of any other jurisdiction. The
foregoing opinions are limited to the laws of the State of Maryland and the
Federal laws of the United States of America governing the banking and trust
powers of First National. In addition, we express no opinion with respect to (i)
Federal securities laws, including the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of
1939, as amended, (ii) the Federal Aviation Act of 1958, as amended, and (iii)
state securities or blue sky laws. Insofar as the foregoing opinions relate to
the validity and enforceability in the State of Maryland of the Equipment Notes
and the other Indenture Trustee's Documents expressed to be governed by the laws
of the State of New York, we have assumed that the laws of the State of New York
are identical to the laws of the State of Maryland in all material respects, and
that the Equipment Notes and such Indenture Trustee's Documents constitute
legal, valid, binding and enforceable documents or instruments under such laws
(as to which we express no opinion).
____________, 199_
Page 5
B. The foregoing opinions regarding enforceability of any document or
instrument, are subject to (i) applicable bankruptcy, insolvency, fraudulent
conveyance, moratorium, reorganization, receivership and similar laws affecting
the rights and remedies of creditors generally, and (ii) general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
C. We have assumed the due authorization, execution and delivery by each
of the parties thereto, other than First National and the Indenture Trustee, of
the Indenture Trustee's Documents to which each is a party and that each of such
parties has the full power, authority and legal right to execute and deliver
each such document.
D. We have assumed that all signatures (other than those of the Indenture
Trustee or First National) on documents and instruments examined by us are
genuine, that all documents and instruments submitted to us as originals are
authentic, and that all documents and instruments submitted to us as copies
conform with the originals, which facts we have not independently verified.
E. We have assumed that the Participation Agreement and the transactions
contemplated thereby are not within the prohibitions of Section 406 of the
Employee Retirement Income Security Act of 1974, as amended.
F. We do not purport to be experts in respect of, or express any opinion
concerning laws, rules or regulations applicable to the particular nature of the
Aircraft and other equipment involved in this transaction.
G. We have made no investigation of, and we express no opinion concerning,
the nature of the title to any part of the Aircraft and other equipment or the
Trust Indenture Estate involved in this transaction or the priority of any
mortgage or security interest.
H. The opinions expressed herein concern only the effect of the laws
(excluding the principles of conflict of laws) of the State of Maryland and the
United States of America as currently in effect. We assume no obligation to
supplement this opinion if any applicable laws change after the date hereof or
if we become aware of any fact that might change the opinions expressed herein
after the date hereof.
I. The opinions expressed in this letter are limited to the matters set
forth in this letter, and no other opinions should be inferred beyond the
matters expressly stated.
____________, 199_
Page 6
This opinion is rendered solely for your benefit and may not be relied
upon by any other person or entity for any purpose without our prior written
consent.
Sincerely yours,
OBER, KALER, XXXXXX & XXXXXXX,
A PROFESSIONAL CORPORATION
By:___________________________
Shareholder
____________, 199_
Page 7
SCHEDULE A
ADDRESSEES
The First National Bank of Maryland, as Indenture Trustee and as Pass-Through
Trustee Baltimore, Maryland
________________________________________, as Owner Trustee
ABN AMRO Bank N.V.
(Chicago Branch)
Chicago, Illinois
Midway Airlines
Durham, North Carolina
Exhibit A-4 to
Leased Aircraft
Participation Agreement
[Owner Trustee Leased Aircraft Opinion]
____________, 1998
To Each of the Persons
Listed on Schedule A
Attached Hereto
Re: Midway Airlines Corporation
Ladies and Gentlemen:
We have acted as counsel to First Union Trust Company, National
Association (the "Trust Company"), in connection with the Trust Agreement, dated
as of ________, 1998 (the "Trust Agreement"), by and between the Trust Company
and ___________, as Owner Participant (the "Owner Participant"). Pursuant to the
Participation Agreement, dated as of ________, 1998 (the "Participation
Agreement"), by and among Midway Airlines Corporation, as Lessee (the "Lessee"),
the Owner Participant, The First National Bank of Maryland ("First National"),
as Indenture Trustee, First National, as Pass-Through Trustee, First National,
as Subordination Agent, and the Trust Company, not in its individual capacity,
except as specifically set forth therein, but solely as Owner Trustee under the
Trust Agreement (the "Owner Trustee"), financing is being provided in connection
with one Canadair Regional jet Series 200ER aircraft bearing U.S. Registration
No. N______ (the "Aircraft"). This opinion is furnished upon the request of the
Owner Trustee pursuant to Section ________ of the Participation Agreement.
Capitalized terms used herein and not otherwise defined are used as defined in
or by reference in the Participation Agreement, except that reference herein to
any instrument shall mean such instrument as in effect on the date hereof.
We have examined forms, counterparts or copies otherwise identified
to our satisfaction of the following documents:
(a) the Participation Agreement;
To Each of the Persons
Listed on Schedule A
Attached Hereto
____________, 1998
Page 2
(b) the Trust Agreement;
(c) the Escrow and Paying Agent Agreement (Class A);
(d) the Lease,
[(e) the Lease Supplement No. I dated the date hereof;]
(f) the Indenture;
[(g) the Indenture Supplement No. 1 dated the date hereof;)]
(h) the Deposit Agreement; and
(i) the Equipment Notes being issued today (the "Equipment Notes").
[N.B. This list of documents (and the appropriate defined terms)
will need to be reviewed after we receive complete documents.]
The documents identified in paragraphs (a) through (h) above are
collectively referred to herein as the "Owner Trustee Agreements".
We have also examined originals or copies of such other documents,
such corporate records, certificates and other statements of governmental
officials and corporate officers and other representatives of the corporations
or entities referred to herein and such other instruments as we have deemed
necessary or appropriate for the purposes of this opinion. Moreover, as to
certain facts material to the opinions expressed herein, we have relied upon the
representations and warranties contained in the instruments referred to above.
Based upon the foregoing and upon an examination of such questions
of law as we have considered necessary or appropriate, and subject to the
assumptions, exceptions and qualifications set forth below, we advise you that,
in our opinion:
1. The Trust Company is a national banking association, duly
organized and validly existing in good standing under the laws of the United
States, is a Citizen of the United States, and has the corporate, banking and
trust powers to enter into and perform its obligations under the Trust
Agreement, and the Owner Trustee has the authority under the Trust Agreement
To Each of the Persons
Listed on Schedule A
Attached Hereto
____________, 1998
Page 3
to execute, deliver and perform its obligations under the Owner Trustee
Agreements and to issue, execute, deliver and perform the Equipment Notes.
2. The Trust Agreement and each other Owner Trustee Agreement have
been duly authorized, executed and delivered by the Trust Company or by the
Owner Trustee, as the case may be, and are the legal, valid and binding
obligations of the Trust Company or the Owner Trustee, as the case may be,
enforceable against the Trust Company or the Owner Trustee, as the case may be,
in accordance with their respective terms; and the Trust Agreement is the legal,
valid and binding obligation of the Owner Participant, enforceable against the
Owner Participant in accordance with its terms and the trust has been validly
created pursuant to the terms of the Trust Agreement.
3. The Equipment Notes have been duly authorized, issued, executed
and delivered by the Owner Trustee, pursuant to authorization contained in the
Trust Agreement, and constitute legal, valid and binding obligation of the Owner
Trustee, enforceable against the Owner Trustee in accordance with their terms
and the terms of the Trust Indenture; and the Equipment Notes are entitled to
the benefits and security afforded by the Trust Indenture in accordance with
their terms and the terms of the Trust Indenture.
4. Neither the execution and delivery by the Trust Company or the
Owner Trustee, as the case may be, of the Owner Trustee Agreements, nor the
issuance, execution and delivery by the Owner Trustee of the Equipment Notes,
nor the fulfillment of or compliance by the Trust Company or the Owner Trustee,
as the case may be, with the respective provisions thereof, conflicts with, or
results in a breach of the terms, conditions or provisions of, or constitutes a
default under, or results in a violation of, the charter or by-laws of the Trust
Company, any law, governmental rule or regulation of the State of Delaware or
any federal law, governmental rule or regulation of the United States of America
governing the banking or trust powers of the Trust Company or, to the best of
our knowledge, any agreement, indenture, mortgage, bank credit agreement, note
or bond purchase agreement, instrument, order, judgment or decree to which the
Trust Company, the Owner Trustee or any of their respective properties is
subject.
5. No consent, approval or other action by or any notice to or
filing with any court or administrative or governmental body is required under
the laws of the State of Delaware or the federal laws of United States of
America governing the banking or trust powers of the Trust Company in connection
with the authorization, execution and delivery by the Trust Company or the Owner
Trustee of the Owner Trustee Agreements, the authorization, issuance, execution
and
To Each of the Persons
Listed on Schedule A
Attached Hereto
____________, 1998
Page 4
delivery by the Owner Trustee of the Equipment Notes, or the fulfillment of or
compliance by the Trust Company or the Owner Trustee with the respective terms
and provisions thereof.
6. The Trust Agreement creates for the benefit of the Owner
Participant the rights and interests in the Trust Estate which the Trust
Agreement by its terms purports to create. The Trustee has received such title
and interest in the Trust Estate as was conveyed to it.
7. There is no fee, tax or other governmental charge under the laws
of the State of Delaware or any political subdivision thereof in existence on
the date hereof on, based on or measured by any payments under the Lease or the
beneficial interests in the Trust Estate, by reason of the creation of the trust
under the Trust Agreement pursuant to the laws of the State of Delaware or the
Owner Trustee's performance of its duties under the Trust Agreement within the
State of Delaware, which would not have been imposed if the Trust Company did
not have its principal place of business and did not perform its obligations
under the Owner Trustee Agreements in the State of Delaware.
8. Assuming that (i) the Aircraft is not used in the State of
Delaware and is not physically located in the State of Delaware at the
commencement or termination of the Term or during such Term, (ii) in connection
with any sale of the Aircraft, such Aircraft will not be physically delivered in
the State of Delaware to a buyer nor be shipped from a point within the State of
Delaware to a buyer, and (iii) the trust created by the Trust Agreement is
treated as a grantor trust for federal income tax purposes within the
contemplation of Sections 671 through 678 of the Internal Revenue Code of 1986,
as amended, there are no fees, taxes, or other charges (except taxes imposed on
fees payable to the Owner Trustee) payable to the State of Delaware or any
political subdivision thereof in connection with the execution, delivery or
performance by the Owner Trustee, the Indenture Trustee, the Pass-Through
Trustee, the Lessee or the Owner Participant, as the case may be, of the Owner
Trustee Agreements or in connection with the making by the Owner Participant of
its acquisition of the beneficial interest in the Trust Estate or in connection
with the issuance and acquisition of the Equipment Notes, and neither the Owner
Trustee, the Trust Estate nor the trust created by the Trust Agreement will be
subject to any fee, tax or other governmental charge (except taxes on fees
payable to the Owner Trustee) under the laws of the State of Delaware or any
political subdivision thereof on, based on or measured by, directly or
indirectly, the gross receipts, net income or value of the Trust Estate solely
by reason of the creation or continued existence of the trust under the terms of
the Trust Agreement pursuant to the laws of the State of Delaware or the Owner
Trustee's performance of its duties under the Trust Agreement.
To Each of the Persons
Listed on Schedule A
Attached Hereto
____________, 1998
Page 5
9. To the best of our knowledge, there are no proceedings pending or
threatened against or affecting the Trust Company or the Owner Trustee in any
court or before any governmental authority, agency or arbitration board or
tribunal which, if adversely determined, individually or in the aggregate, would
materially and adversely affect the right, power and authority of the Trust
Company or the Owner Trustee to enter into or perform its obligations under the
Owner Trustee Agreements and the Equipment Notes.
10. Neither a Delaware Court nor a Federal court applying federal or
Delaware law, if properly presented with the issue and after having properly
considered such issue, would permit the Owner Participant to terminate the Trust
Agreement, except in accordance with its terms.
11. Under the laws of the State of Delaware, so long as the Trust
Agreement has not been terminated in accordance with its terms, creditors of any
person that is an Owner Participant, holders of a lien against the assets of any
such person and representatives of creditors of any such person, such as
trustees, receivers or liquidators (whether or not any insolvency proceeding has
been commenced) (collectively, the "Creditors") may acquire legal, valid and
enforceable claims and liens, as to the Trust Estate, only against the rights of
such Owner Participant under the Trust Agreement or in the Trust Estate, and may
not through the enforcement of such Creditor's rights, acquire any greater
rights than the rights of such Owner Participant with respect to the Trust
Agreement or Trust Estate.
12. To the extent that the Uniform Commercial Code of the State of
Delaware (the "UCC") is applicable, except for the Indenture Trustee's taking of
possession of all monies, securities, and instruments constituting part of the
Indenture Estate, no action, including the filing or recording of any document,
is necessary (i) to create in the State of Delaware the security interest in the
Indenture Estate (including the assignment of the Lease to the Indenture
Trustee) which the Trust Indenture by its terms purports to create in favor of
the Indenture Trustee, and (ii) to perfect in the State of Delaware such
security interest, except for the filing of a UCC financing statement in the
Office of the Secretary of State of the State of Delaware.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. The foregoing opinions are limited to the laws of the State of
Delaware and the federal laws of the United States of America governing the
banking and trust powers of the Trust Company, except that the opinion rendered
in paragraph 10 above is limited to the laws of the
To Each of the Persons
Listed on Schedule A
Attached Hereto
____________, 1998
Page 6
State of Delaware and Title 11 of the United States Code entitled "Bankruptcy"
and the opinion rendered in paragraph 11 above is limited to the laws of the
State of Delaware. In addition, we express no opinion with respect to (i)
federal securities laws, including the Securities Act of 1933, as amended, and
the Trust Indenture Act of 1939, as amended, (ii) the Federal Aviation Act of
1958, as amended (except with respect to the opinion set forth in paragraph 1
above concerning the citizenship of the Trust Company), (iii) the Federal
Communications Act of 1934, as amended, or (iv) state securities or blue sky
laws. Insofar as the foregoing opinions relate to the validity and
enforceability of the Equipment Notes and the Owner Trustee Agreements expressed
to be governed by laws other than the laws of the State of Delaware, we have
assumed that the Equipment Notes and such Owner Trustee Agreements constitute
legal, valid, binding and enforceable documents or instruments under such laws
(as to which we express no opinion).
B. The foregoing opinions regarding the enforceability of any
document or instrument are subject to (i) applicable bankruptcy (except as set
forth in paragraph A above), insolvency, moratorium, reorganization,
receivership, and other similar laws affecting the rights and remedies of
creditors generally, and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
C. We have assumed the due authorization, execution and delivery by
each of the parties thereto, other than the Trust Company and the Owner Trustee,
of the Owner Trustee Agreements to which each is a party and that each of such
parties has the full power, authority and legal right to execute and deliver
each such document.
D. The opinion set forth in paragraph 1 above concerning the
citizenship of the Trust Company is based upon an affidavit of an officer of the
Trust Company, the facts set forth in which we have not independently verified.
E. We have assumed that all signatures, other than those of the
Trust Company or the Owner Trustee, on documents and instruments submitted to us
as originals are authentic, and that all documents and instruments submitted to
us as copies conform with the originals, which facts we have not independently
verified.
F. We do not purport to be experts in respect of, or express any
opinion concerning, aviation law or other laws, rules or regulations applicable
to the particular nature of the equipment to be acquired by the Owner Trustee.
To Each of the Persons
Listed on Schedule A
Attached Hereto
____________, 1998
Page 7
G. We have assumed that the Owner Trustee Agreements and the
transactions contemplated thereby are not within the prohibitions of Section 406
of the Employee Retirement Income Security Act of 1974.
H. No opinion is expressed as to the nature of the title to any part
of the Trust Estate or the priority of any mortgage or security interest.
I. The opinions set forth in paragraphs 10 and 11 above should be
interpreted in accordance with the Special Report by the TriBar Opinion
Committee, Opinions in the Bankruptcy Context: Rating Agency. Structured
Financing and Chanter 11 Transactions, 46 Bus. Law. 717 (1991).
This opinion is rendered solely for your benefit and may not be
furnished or quoted to or relied upon by any other person or entity for any
purpose without our prior written consent.
Very truly yours,
MML/1se
To Each of the Persons
Listed on Schedule A
Attached Hereto
____________, 1998
Page 8
G. We have assumed that the Owner Trustee Agreements and the
transactions contemplated thereby are not within the prohibitions of Section 406
of the Employee Retirement Income Security Act of 1974.
H. No opinion is expressed as to the nature of the title to any part
of the Trust Estate or the priority of any mortgage or security interest.
I. The opinions set forth in paragraphs 10 and 11 above should be
interpreted in accordance with the Special Report by the TriBar Opinion
Committee, Opinions in the Bankruptcy Context: Rating Agency. Structured
Financing and Chapter 11 Transactions, 46 Bus. Law. 717 (1991).
This opinion is rendered solely for your benefit and may not be
furnished or quoted to or relied upon by any other person or entity for any
purpose without our prior written consent.
Very truly yours,
MML/1se
SCHEDULE A
OWNER TRUSTEE
First Union Trust Company, National Association
OWNER PARTICIPANT
LESSEE
Midway Airlines Corporation
INDENTURE TRUSTEE. PASS-THROUGH TRUSTEE AND SUBORDINATION AGENT:
The First National Bank of Maryland
INITIAL PURCHASERS:
Xxxxxx Xxxxxxx & Co. Incorporated
Credit Suisse First State Boston Corporation
RATING AGENCY:
Standard & Poor's Rating Service
[LETTERHEAD OF XXXXX & XXXXXXX]
Exhibit A-5 to
Leased Aircraft
Participation Agreement
[FAA Counsel Leased Aircraft Opinion]
_____________, 1998
To the Addressees on the
Schedule Attached Hereto
Re: ___________________ model ______________aircraft with manufacturer's
serial number ______ and United States nationality and registration
marks N________ (the "Aircraft")
Ladies and Gentlemen:
This letter confirms that we filed the following described instruments
with the Federal Aviation Administration (the "FAA") today at the respective
times noted below:
[(a) AC Form 8050-2 Aircraft Xxxx of Sale dated ___________, 1998 (the
"FAA Xxxx of Sale") by ________________ (the "Lessee") to
_____________________ as Owner Trustee (the "Owner Trustee") under
Trust Agreement ____________ dated as of ______________, 1998 (the
"Trust Agreement") between ________________ as Owner Participant and
the Owner Trustee, covering the Aircraft was filed at __:__ __.M.,
C.__.T.;]*
(b) AC Form 8050-1 Aircraft Registration Application by the Owner
Trustee covering the Aircraft, to which were attached the Affidavits
required by Section 47.7(c)(2)(ii) of Part 47 of the Federal
Aviation Regulations, was filed at __:__ __.M., C.__.T.;
(c) the Trust Agreement was filed at __:__ __.M., C.__.T.;
(d) Trust Indenture and Security Agreement ____________ dated as of
______________ 1998 (the "Indenture") between the Owner Trustee and
_______________________ as Indenture Trustee (the "Indenture
Trustee"), to which was attached the Trust Agreement and Indenture
Supplement _________________ dated ______________, 1998 (the
"Indenture Supplement") covering the Aircraft and the
__________model ___________ aircraft engines with manufacturer's
serial numbers
------
* To be modified if delivery direct from Manufacturer.
______________________ and ________________ (the "Engines"), was
filed at __:__ __.M., C.__.T.; and
(e) Lease Agreement _____________ dated as of ______________, 1998 (the
"Lease") between the Owner Trustee as lessor and the Lessee, to
which were attached Lease Supplement No. 1 dated _____________, 1998
(the "Lease Supplement") covering the Aircraft and the Engines, the
Indenture and the Indenture Supplement, was filed at __:__ __.M.,
C.__.T.
Based upon our examination of the above described instruments and of such
records of the FAA as we deemed necessary to render this opinion and as were
made available to us by the FAA, it is our opinion that:
(a) the FAA Xxxx of Sale, the Indenture with the Indenture Supplement
attached and the Lease with the Lease Supplement, the Indenture and
the Indenture Supplement attached are in due form for recordation by
and have been duly filed for recordation with the FAA pursuant to
and in accordance with the provisions of Section 44107 of Title 49
of the United States Code:
(b) legal title to the Aircraft is vested in the Owner Trustee and all
instruments necessary to cause the FAA in due course to issue to the
Owner Trustee an AC Form 8050-3 Certificate of Aircraft Registration
covering the Aircraft have been duly filed with the FAA pursuant to
and in accordance with the provisions of Sections 44102 and 44103 of
Title 49 of the United States Code;
(c) the Aircraft and the Engines are free and clear of Liens (as such
term is defined in the Lease) other than such as are created by the
Indenture, as supplemented by the Indenture Supplement and and by
the Lease, as supplemented by the Lease Supplement;
(d) the Indenture, as supplemented by the Indenture Supplement,
creates a duly and validly perfected first priority security
interest in favor of the Indenture Trustee in the Aircraft and
the Engines and in all of the right, title and interest of the
Owner Trustee in and to the Lease, as supplemented by the Lease
Supplement (insofar as such security interest affects an interest
covered by the recording system established by the FAA pursuant
to Section 44107 of Title 49 of the United States Code);
(e) the rights of the Owner Trustee and the Lessee under the Lease, as
supplemented by the Lease Supplement, with respect to the Aircraft
and the Engines are perfected;
(f) the Indenture, as supplemented by the Indenture Supplement, is not
required to be refiled with the FAA or filed or recorded in any
other place within the United States in order to perfect or maintain
the perfection of the security interests created thereby in the
Aircraft and the Engines under the applicable laws of any
jurisdiction within the United States; and
(g) no other registration of the Aircraft and no filings or
recordings (other than the filings and recordings with the FAA
which have been effected) are necessary to perfect in any
jurisdiction within the United States the Owner Trustee's title
to the Aircraft or the security interest created by the
Indenture, as supplemented by the Indenture Supplement, in the
Aircraft and the Engines under the applicable laws of any
jurisdiction within the United States.
No opinion is herein expressed as to: (i) laws other than the federal laws
of the United States; (ii) the validity or enforceability under local law of the
Indenture, as supplemented by the Indenture Supplement; or (iii) the recognition
of the perfection of the security interest created by the Indenture, as
supplemented by the Indenture Supplement, as against third parties in any legal
proceedings outside the United States. Since our examination was limited to
records maintained by the FAA Aircraft Registry, our opinion does not cover
liens which are perfected without the filing of notice thereof with the FAA,
such as federal tax liens, liens arising under Section 1368(a) of Title 29 of
the United States Cede and possessory artisans' liens, and was subject to the
accuracy of FAA personnel in the filing, indexing and recording of instruments
filed with the FAA and in the search for encumbrance cross-reference index cards
for the Engines. This opinion is rendered in reliance upon the opinion of the
Aeronautical Center Counsel dated ____________________, 1998 (a copy of which is
attached hereto) and upon the past practice of the FAA which is consistent with
said opinion.
Very truly yours,
XXXXX X. XXXXXX
For the Firm
RDJ:pkk
SCHEDULE A
Exhibit B to
Leased Aircraft
Participation Agreement
[Form of Assignment and Assumption Agreement]
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of ____________,
_________ between [_______________________] (the "Transferee") and XXXX ATLANTIC
CREDIT CORPORATION (the "Owner Participant").
W I T N E S S E T H :
WHEREAS, the Owner Participant entered into a Participation
Agreement, dated as of _____________________, 1998 among Midway Airlines
Corporation, as Lessee, First Union Trust Company National Association, not in
its individual capacity (except as otherwise expressly provided therein) but
solely as Owner Trustee, the Owner Participant, as Owner Participant, The First
National Bank of Maryland, as Indenture Trustee, The First National Bank of
Maryland, in its capacity as Pass-Through Trustee and The First National Bank of
Maryland, in its capacity as Subordination Agent (as the same may be from time
to time amended, the "Participation Agreement"; and into certain other
Transaction Documents (as defined herein);
WHEREAS, the Owner Participant desires to sell and assign to the
Transferee all of its right, title and interest in, to and under the Trust
Agreement (as defined in the Participation Agreement), and the Transferee
desires to (i) purchase and accept from the Owner Participant the assignment of
all of the Owner Participant's right, title and interest in, to and under the
Trust Agreement and (ii) assume liability for, and undertake performance of, all
obligations of the Owner Participant under the Trust Agreement and the other
Transaction Documents to which the Owner Participant is a party relating to the
period after the Transfer Date (as defined herein); and
WHEREAS, capitalized terms used herein without definition and which
are defined in the Participation Agreement are used herein with the respective
meanings given such terms in the Participation Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties agree as follows:
1. Assignment. Effective as of the date hereof, the Owner
Participant hereby irrevocably sells, assigns, transfers, conveys and sets over
to the Transferee all its right, title and interest in, to and under the Trust
Estate, the Participation Agreement, the Trust Agreement, the Tax Indemnity
Agreement and all other
Operative Agreements (as defined in the Participation Agreement), agreements,
contracts, documents and instruments executed and delivered at any time prior to
the execution and delivery of this Agreement in connection with any of the
foregoing (the "Transaction Documents"), and any proceeds therefrom, except such
rights of the Owner Participant as have accrued prior to the date hereof (the
"Transfer Date") (such excepted rights to include, without limitation, the right
to receive any amounts due or accrued to the Owner Participant under the Trust
Agreement as of a date prior to the Transfer Date and the right to receive any
Excepted Payments pursuant to the Participation Agreement or the Tax Indemnity
Agreement with respect to events occurring prior to the Transfer Date).
2. Assumption. The Transferee hereby assumes all of the obligations,
liabilities and duties of the Owner Participant under each Transaction Document
(the "Assumed Obligations") and confirms that it shall be deemed a party to each
Transaction Document to which the Owner Participant is a party and shall be
bound by all the terms thereof (including the agreements and obligations of the
Owner Participant set forth therein) as if it were named as the Owner
Participant therein.
3. Further Assurances. The Owner Participant shall, at any time and
from time to time, upon the request of the Transferee, promptly and duly execute
and deliver any and all such further instruments and documents and take such
further action as the Transferee may reasonably request to obtain the full
benefits of this Assignment and of the rights and powers herein granted.
4. Representations and Warranties. The Transferee hereby represents
and warrants to the other parties hereto that:
(a) Organization; Authority. The Transferee (i) is a ___________
duly organized, validly existing and in good standing under the laws of the
[State] of __________ and (ii) has the full corporate power and authority to
conduct its business as presently conducted, to own or hold under lease its
properties and to execute, deliver and perform this Agreement and to perform the
Assumed Obligations and each of the Transaction Documents to which the
Transferee is or will be a party.
(b) Due Authorization. The execution, delivery and performance of
this Agreement and the performance of the Assumed Obligations and each of the
Transaction Documents to which the Transferee is or will be a party have been
duly authorized by all necessary corporate action on the part of the Transferee
and do not require approval or consent of, or notice to, any trustee or holders
of any indebtedness or obligations of the Transferee or any lessor under any
lease to the Transferee.
(c) Conflict. The execution, delivery and performance by the
Transferee of this Agreement and the performance of the Assumed Obligations and
each of the Transaction Documents to which the Transferee is or will be a party
and the consummation or performance by the Transferee of the transactions
contemplated thereby will not conflict with or result in any violation of,
constitute a default under,
-2-
or result in the creation of any Lien upon any property of the Transferee under
any term of the Certificate of Incorporation or By-laws of the Transferee or any
agreement, mortgage, contract, indenture, lease or other instrument, or any
Applicable Law, by which the Transferee or its properties or assets are bound.
(d) Government Consents. Neither the execution or delivery of this
Agreement and the performance of the Assumed Obligations and each of the
Transaction Documents to which the Transferee is or will be a party nor the
consummation of any of the transactions contemplated hereby or thereby by the
Transferee requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of any United
States federal, state or other governmental authority or agency, including any
judicial body.
(e) Legal, Valid and Binding Obligations. The Assumed Obligations
and this Agreement constitute, and any other Transaction Document to which the
Transferee will be a party, effective as of the Transfer Date or, as to
Transaction Documents not in effect on or prior to the Transfer Date, when
executed and delivered, will constitute, the legal, valid and binding
obligations of the Transferee enforceable against the Transferee in accordance
with their respective terms except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, and other similar laws
affecting the rights of creditors generally and by general principles of equity,
regardless of whether enforcement is pursuant to a proceeding in equity or at
law.
(f) Defaults. The Transferee is not in default under any mortgage,
deed of trust, indenture or other instrument or agreement to which the
Transferee is a party or by which it or any of its properties or assets may be
bound, or in violation of any Applicable Law, which default or violation could
have an adverse effect on the ability of the Transferee to perform any of its
obligations under this Agreement, the Assumed Obligations or the Transaction
Documents to which the Transferee is or will be a party.
(g) Litigation. There are no pending or, to the knowledge of the
Transferee, threatened actions or proceedings by or before any court or
administrative agency or arbitrator that involve the Transaction Documents or
the transactions contemplated thereby or that, either individually or in the
aggregate, are reasonably likely to adversely affect the ability of the
Transferee to perform its obligations under this Assumption Agreement, the
Assumed Obligations or any of the Transaction Documents to which it is or will
be a party or the validity of this Assumption Agreement, the Assumed Obligations
or any of such Transaction Documents.
(h) Securities Representation. The Transferee is acquiring its
interest in the Trust Estate for investment and not with a view to any resale or
distribution thereof, but subject, nevertheless, to any requirement of law that
the disposition of its property remain within its control at all times, and that
neither it nor anyone authorized by it to act on its behalf has directly or
indirectly offered any Equipment
-3-
Note or interest in the Owner Participant's Commitment, the Trust Estate, or any
similar security for sale to, or solicited any offer to acquire any of the same
from, anyone.
(i) Liens. Upon the execution of this Assumption Agreement, there
will be no Lessor's Lien attributable to the Transferee on the Owner
Participant's Commitment or any interest therein or on the Trust Estate.
(j) ERISA. No part of the funds to be used by the Transferee to
contribute to the Owner Trustee to acquire the interests to be acquired by it
hereunder constitutes assets (within the meaning of ERISA and any rules and
regulations thereunder) of an employee benefit plan subject to Title I of ERISA
or of an individual retirement account or an employee benefit plan subject to
Section 4975 of the Code, or any trust established under any such plan or
account or of a "governmental plan," as defined in Section 3(32) of ERISA or in
Section 414(d) of the Code, organized in a jurisdiction having prohibitions on
transactions with such governmental plan substantially similar to those
contained in Section 406 of ERISA or Section 4975 of the Code.
(k) Permitted Transferee. The Transferee is a Permitted Transferee.
5. Reliance. The representations, warranties, covenants and
agreements of the Transferee are made for the benefit of, and may be relied upon
by, the Owner Trustee, Lessee, Owner Participant, Indenture Trustee, each
Pass-Through Trustee, the Subordination Agent and each Holder (collectively, the
"Beneficiaries"), and each of the Beneficiaries shall be deemed to be an express
third party beneficiary with respect thereto, entitled to enforce directly and
in its own name any rights or claims it may have against such Transferee as such
beneficiary.
6. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered on the date first above written.
[____________________________]
Transferee
By:__________________________
Name:
Title:
-4-
XXXX ATLANTIC CREDIT
CORPORATION
Owner Participant
By:__________________________
Name:
Title:
-5-
[Exhibit A-3 to Note
Purchase Agreement Form of
Leased Aircraft Indenture]
================================================================================
TRUST INDENTURE AND SECURITY AGREEMENT [N_____]
dated as of _________ ___, 199_
between
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
not in its individual capacity except as expressly
provided herein, but solely
Owner Trustee
and
THE FIRST NATIONAL BANK OF MARYLAND,
as Indenture Trustee
================================================================================
COVERING ONE CANADAIR REGIONAL JET SERIES 200ER AIRCRAFT
BEARING U.S. REGISTRATION NO. N____
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS............................................... 8
Section 1.01 Definitions........................................ 8
ARTICLE II ISSUE, EXECUTION, FORM AND
REGISTRATION OF EQUIPMENT NOTES........................... 8
Section 2.01. Authentication and Delivery of Equipment Notes..... 8
Section 2.02. Execution of Equipment Notes....................... 8
Section 2.03. Authentication..................................... 9
Section 2.04. Form and Terms of Equipment Notes; Payments on
Equipment Notes.................................... 9
Section 2.05. Payments from Trust Indenture Estate Only.......... 11
Section 2.06. Registration, Transfer and Exchange................ 12
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen
Equipment Notes.................................... 13
Section 2.08. Cancellation of Equipment Notes; Destruction
Thereof............................................ 14
Section 2.09. Termination of Interest in Trust Indenture Estate.. 14
Section 2.10. Equipment Notes in Respect of Replacement
Aircraft........................................... 14
Section 2.11. Assumption of Obligations Under Equipment Notes
and Other Operative Agreements..................... 15
Section 2.12. Subordination...................................... 15
ARTICLE III COVENANTS................................................. 16
Section 3.01. Payment of Principal, Make-Whole Premium and
Interest........................................... 16
Section 3.02. Offices for Payments, etc.......................... 16
Section 3.03. Appointment to Fill a Vacancy in Office of
Indenture Trustee.................................. 16
Section 3.04. Paying Agents...................................... 16
Section 3.05. Covenants of the Owner Trustee..................... 17
Section 3.06. [Reserved]......................................... 17
Section 3.07. Disposal of Trust Indenture Estate................. 17
Section 3.08. No Representations or Warranties as to Aircraft or
Documents.......................................... 18
Section 3.09. Further Assurances; Financing Statements........... 18
ARTICLE IV HOLDER LISTS.............................................. 18
Section 4.01. Holder Lists: Ownership of Equipment Notes......... 18
-i-
ARTICLE V RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE.................... 19
Section 5.01. Basic Rent Distribution............................ 19
Section 5.02. Event of Loss and Replacement; Prepayment.......... 20
Section 5.03. Payment After Indenture Event of Default, etc...... 21
Section 5.04. Certain Payments................................... 24
Section 5.05. Other Payments..................................... 25
Section 5.06. Payments to Owner Trustee.......................... 25
Section 5.07. Application of Payments............................ 25
Section 5.08. Investment of Amounts Held by Indenture Trustee.... 26
Section 5.09. Withholding Taxes.................................. 26
ARTICLE VI PREPAYMENT OF EQUIPMENT NOTES............................. 27
Section 6.01. No Prepayment Except as Specified.................. 27
Section 6.02. Prepayment of Equipment Notes...................... 27
Section 6.03. Notice of Prepayment to Holders.................... 29
Section 6.04. Deposit of Prepayment Price........................ 29
Section 6.05. Equipment Notes Payable on Prepayment Date......... 29
ARTICLE VII INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS.......................... 30
Section 7.01. Indenture Event of Default......................... 30
Section 7.02. Remedies........................................... 32
Section 7.03. Return of Aircraft, etc............................ 34
Section 7.04. Indenture Trustee May Prove Debt................... 37
Section 7.05. Remedies Cumulative................................ 39
Section 7.06. Suits for Enforcement.............................. 39
Section 7.07. Discontinuance of Proceedings...................... 39
Section 7.08. Unconditional Right of Holders to Payments on
Equipment Notes.................................... 39
Section 7.09. Control by Holders................................. 40
Section 7.10. Waiver of Past Indenture Default................... 40
Section 7.11. Notice of Indenture Default........................ 40
ARTICLE VIII RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT................................. 41
Section 8.01. Certain Rights of Owner Trustee and Owner
Participant........................................ 41
Section 8.02. Owner Participant's Right to Prepay or Purchase
the Equipment Notes................................ 44
Section 8.03. Certain Rights of Owner Participant................ 45
ARTICLE IX CONCERNING THE INDENTURE TRUSTEE.......................... 47
Section 9.01. Acceptance of Trusts............................... 47
Section 9.02. Duties Before, and During, Existence of Indenture
Event of Default................................... 47
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Section 9.03. Certain Rights of the Indenture Trustee............ 49
Section 9.04. Indenture Trustee Not Responsible for Recitals,
Equipment Notes, or Proceeds....................... 50
Section 9.05. Indenture Trustee and Agents May Hold Equipment
Notes; Collections, etc............................ 50
Section 9.06. Moneys Held by Indenture Trustee................... 50
Section 9.07. Right of Indenture Trustee to Rely on Officer's
Certificate, etc................................... 50
Section 9.08. Replacement Airframes and Replacement Engines...... 51
Section 9.09. Indenture Supplement for Replacements.............. 54
Section 9.10. Effect of Replacement.............................. 54
Section 9.11. Compensation....................................... 54
ARTICLE X CONCERNING THE HOLDERS.................................... 55
Section 10.01. Evidence of Action Taken by Holders................ 55
Section 10.02. Proof of Execution of Instruments and of Holding of
Equipment Notes.................................... 55
Section 10.03. Holders to Be Treated as Owners.................... 55
Section 10.04. Equipment Notes Owned by Owner Trustee or Lessee
Deemed Not Outstanding............................. 56
Section 10.05. ERISA.............................................. 56
ARTICLE XI INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE.................................. 57
ARTICLE XII SUCCESSOR TRUSTEES........................................ 58
Section 12.01. Notice of Successor Owner Trustee.................. 58
Section 12.02. Resignation and Removal of Indenture Trustee:
Appointment of Successor........................... 58
Section 12.03. Persons Eligible for Appointment as Indenture
Trustee............................................ 59
Section 12.04. Acceptance of Appointment by Successor Trustee..... 59
Section 12.05. Merger, Consolidation or Succession to Business of
Indenture Trustee.................................. 60
Section 12.06. Appointment of Separate Trustees................... 61
ARTICLE XIII SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS....................... 63
Section 13.01. Supplemental Indentures Without Consent of
Holders............................................ 63
Section 13.02. Supplemental Indentures With Consent of Holders.... 64
Section 13.03. Effect of Supplemental Indenture................... 65
Section 13.04. Documents to Be Given to Indenture Trustee......... 66
Section 13.05. Notation on Equipment Notes in Respect of
Supplemental Indentures............................ 66
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Section 13.06. No Request Necessary for Lease Supplement or
Indenture Supplement............................... 66
Section 13.07. Notices to Liquidity Providers..................... 66
ARTICLE XIV SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS.......................................... 66
Section 14.01. Satisfaction and Discharge of Indenture:
Termination of Indenture........................... 66
Section 14.02. Application by Indenture Trustee of Funds Deposited
for Payment of Equipment Notes..................... 67
Section 14.03. Repayment of Moneys Held by Paying Agent........... 67
Section 14.04. Transfer of Unclaimed Money Held by Indenture
Trustee and Paying Agent........................... 67
ARTICLE XV MISCELLANEOUS............................................. 68
Section 15.01. Capacity in Which Acting........................... 68
Section 15.02. No Legal Title to Trust Indenture Estate in Holders 68
Section 15.03. Sale of Trust Indenture Estate by Indenture Trustee
is Binding......................................... 68
Section 15.04. Indenture Benefits Trustees, Participants,
Lessee, and Liquidity Providers Only............... 68
Section 15.05. No Action Contrary to Lessee's Rights Under the
Lease.............................................. 69
Section 15.06. Notices............................................ 69
Section 15.07. Officer's Certificates and Opinions of Counsel..... 69
Section 15.08. Severability....................................... 70
Section 15.09. No Oral Modifications or Continuing Waivers........ 70
Section 15.10. Successors and Assigns............................. 70
Section 15.11. Headings........................................... 70
Section 15.12. Normal Commercial Relations........................ 70
Section 15.13. Governing Law; Counterparts........................ 71
Section 15.14. Lessee's Right of Quiet Enjoyment. ............... 71
Annex A - Principal Amount of Equipment Notes
Annex B - Amortization Schedule
Appendix A - Definitions
Exhibit A - Form of Indenture Supplement
Exhibit B - Form of Equipment Note
Schedule I - Principal Amortization
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TRUST INDENTURE AND SECURITY AGREEMENT [N_______]
TRUST INDENTURE AND SECURITY AGREEMENT [N ] dated as of ___________
(the "Indenture"), between FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
otherwise specifically set forth herein (when acting in such individual
capacity, "Trust Company"), but solely as owner trustee (the "Owner Trustee")
under the Trust Agreement, as defined herein, and THE FIRST NATIONAL BANK OF
MARYLAND, a national banking association (when acting in its individual
capacity, "FNBM"), as Indenture Trustee hereunder (the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and Trust Company have, prior to the
execution and delivery of this Indenture, entered into a Trust Agreement [N___]
dated as of [__________], (as amended or otherwise modified from time to time in
accordance with the provisions thereof and of the Participation Agreement, the
"Trust Agreement"), whereby, among other things, Trust Company has declared a
certain trust for the use and benefit of the Owner Participant, subject,
however, to the Lien of this Indenture for the use and benefit of, and with the
priority of payment to, the holders of the Equipment Notes issued hereunder, and
the Owner Trustee is authorized and directed to execute and deliver this
Indenture;
WHEREAS, the Owner Trustee desires by this Indenture, among other
things (i) to provide for the issuance by the Owner Trustee of Equipment Notes
as provided in the Participation Agreement, and (ii) to provide for the
assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee,
as part of the Trust Indenture Estate hereunder of, among other things, certain
of the Owner Trustee's estate, right, title and interest in and to the Aircraft
and the Indenture Documents and certain payments and other amounts (other than
Excepted Payments) received hereunder or thereunder in accordance with the terms
hereof, as security for, among other things, the Owner Trustee's and the
Lessee's obligations to the Holders and the Indenture Indemnitees and for the
benefit and security of such Holders;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Owner Trustee, and authenticated, issued and delivered
hereunder, the valid obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Indenture the valid,
binding and legal obligation of the Owner Trustee, enforceable in accordance
with its terms, have been done and performed and have happened.
NOW, THEREFORE, the parties agree as follows:
GRANTING CLAUSE
NOW, THEREFORE, in consideration of the mutual promises contained
herein and to secure (i) the prompt payment of the principal of and Make-Whole
Premium, if any, and interest on, and all other amounts due with respect to, all
the Equipment Notes from time to time outstanding under this Indenture and all
other amounts due hereunder and (ii) the performance and observance by the Owner
Trustee and the Lessee of all the agreements, covenants and provisions in this
Indenture, the Equipment Notes, the Participation Agreement and in the Lease
contained for the benefit of the Holders, and the prompt payment of any and all
amounts from time to time owing under the Participation Agreement by the Owner
Trustee or the Lessee to the Holders and each of the Indenture Indemnitees
(provided that, with respect to amounts owed to the Liquidity Providers which
relate to amounts due under the Liquidity Facilities, the amounts secured hereby
shall only include such amounts to the extent due and owing pursuant to the
final paragraph of Section 2.04 hereof) (collectively the "Secured Obligations")
and for the uses and purposes and subject to the terms and provisions of this
Indenture, and in consideration of the premises and of the covenants in this
Indenture and in the Equipment Notes and of the purchase of the Equipment Notes
by their Holders, and of the sum of $1 paid to the Owner Trustee by the
Indenture Trustee at or before the delivery of this Indenture, the receipt and
sufficiency of which are hereby acknowledged, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged, granted a
first priority security interest in and confirmed, and does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and grant a first
priority security interest in and confirm to the Indenture Trustee, its
successors and assigns, in trust for the equal and ratable security and benefit
of the Holders and each of the Indenture Indemnitees, a first priority security
interest in and first mortgage Lien on all estate, right, title and interest of
the Owner Trustee in, to and under the following described property, rights and
privileges other than Excepted Payments, which collectively, excluding Excepted
Payments but including all property specifically subjected to the Lien of this
Indenture by the terms hereof, by any supplement to this Indenture (including
the Indenture Supplement) or any mortgage supplemental to this Indenture, are
included within the Trust Indenture Estate, subject always to the rights granted
to the Owner Trustee or any Owner Participant hereunder and to the other terms
and conditions of this Indenture:
(1) The Airframe, as described in the Indenture Supplement, and any
airframe substituted in replacement thereof pursuant to the provisions of this
Indenture; the Engines, as the same are more particularly described in the
Indenture
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Supplement, whether or not such Engines shall be installed in or attached to the
Airframe or any other airframe, and any Replacement Engine therefor; and all
Parts in respect of the Airframe and the Engines and all records, logs and other
documents at any time maintained with respect to the foregoing property;
(2) The Lease and all Rent thereunder, including, without
limitation, all amounts of Basic Rent and Supplemental Rent, and payments of any
kind thereunder and including all rights of the Owner Trustee to execute any
election or option or to give or receive any notice, consent, waiver or approval
under or in respect of the Lease or to accept any surrender of the Aircraft or
any part thereof as well as any rights, powers or remedies on the part of the
Owner Trustee, whether arising under the Lease or by statute or at law or in
equity or otherwise arising out of any Event of Default;
(3) The Purchase Agreement (to the extent assigned by the Purchase
Agreement Assignment), the Purchase Agreement Assignment, the PAA Consent, the
Engine Manufacturer's Consent, the FAA Xxxx of Sale, the Warranty Xxxx of Sale
and the Participation Agreement (to the extent of amounts payable to the Owner
Trustee thereunder) (collectively, and together with the Lease and the Equipment
Notes, the "Indenture Documents"), including all rights of the Owner Trustee to
execute any election or option or to give or receive any notice, consent, waiver
or approval under or in respect of any of the foregoing documents and
instruments;
(4) All the tolls, rents, issues, profits, products, revenues and
other income (including sales proceeds) of the property subjected or required to
be subjected to the Lien of this Indenture, and all of the estate, right, title
and interest of the Owner Trustee in and to the same and every part of said
property;
(5) All other moneys and securities (including Permitted
Investments) now or hereafter paid or deposited or required to be paid or
deposited to or with the Indenture Trustee by or for the account of the Owner
Trustee pursuant to any term of any Operative Agreement, except the Tax
Indemnity Agreement, and held or required to be held by the Indenture Trustee
hereunder;
(6) All requisition and insurance proceeds with respect to the
Aircraft or any part thereof (to the extent of the Owner Trustee's interest
therein pursuant to the terms of the Lease), including insurance required to be
maintained by the Lessee under Section 9 of the Lease; and
(7) All proceeds of the foregoing.
EXCLUDING, HOWEVER, from the foregoing grant of the Lien and
security interest of this Indenture and from the Trust Indenture Estate, (i) all
Excepted Payments, including without limitation all right, title and interest of
any Owner Participant in, to and under the Tax Indemnity Agreement and any
moneys due or to become due under the Tax Indemnity Agreement and all rights to
collect and enforce
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Excepted Payments and (ii) rights granted to or retained by the Owner Trustee or
any Owner Participant hereunder and SUBJECT TO the following provisions:
(a) (i) whether or not an Indenture Event of Default shall occur and
be continuing, the Owner Trustee and any Owner Participant shall at all
times retain the right, to the exclusion of the Indenture Trustee: (A) to
Excepted Payments and to commence an action at law to obtain or otherwise
demand, xxx for or receive and enforce the payment of such Excepted
Payments, (B) to exercise any election or option or make any decision or
determination or to give or receive any notice (including notice of
Default), consent, waiver or approval in respect of any such Excepted
Payment, (C) to adjust (and make any decision or determination or give any
notice or consent with respect to) Basic Rent and the percentages relating
to Termination Value and the EBO Price, and the EBO Date, as provided in
Section 3(d) of the Lease and Section 13.01 of the Participation
Agreement, (D) to exercise any election or option to make any decision or
determination, or to give or receive any notice, consent, waiver or
approval, or to take any other action in respect of, but in each case only
to the extent relating to, Excepted Payments (except for, in respect of
any portion of Basic Rent constituting an Excepted Payment, any action
changing the manner by which such Basic Rent is to be paid), (E) to retain
the rights of the "Lessor" with respect to solicitations of bids, and the
election to retain the Aircraft pursuant to Section 14(c) of the Lease,
(F) to retain the right of "Lessor" to determine the Fair Market Rental
Value or Fair Market Sales Value pursuant to the respective definitions
thereof, (G) to exercise all other rights of the Lessor under Section 13
of the Lease with respect to the retention or purchase by the Lessee or
the Lessor of the Aircraft or the exercise by the Lessee of the Lessee's
renewal or purchase options, (H) to retain all rights with respect to
insurance maintained for its own account which Section 9(f) of the Lease
specifically confers on the "Owner Participant", (I) to approve
appraisers, lawyers and other professionals and receive notices,
certificates, reports, filings, opinions and other documents, in each case
with respect to matters relating to the Owner Participant's tax position,
(J) to approve any accountants to be used in the verification of any Rent
adjustment, and (K) to exercise, to the extent necessary to enable it to
exercise its rights under Section 8.03 hereof, the rights of the "Lessor"
under Section 18 of the Lease;
(ii) whether or not an Indenture Event of Default shall occur and be
continuing, the Owner Trustee and the Indenture Trustee shall each have
the rights separately but not to the exclusion of the other: (A) to
receive from the Lessee all notices, certificates, reports, filings,
opinions of counsel, copies of all documents and all information which the
Lessee is permitted or required to give or furnish to the "Lessor"
pursuant to the Lease or to the Owner Trustee pursuant to any other
Operative Agreement, (B) to exercise inspection rights pursuant to Section
6 of the Lease (provided that if an Indenture Event of Default shall be
continuing, no inspection right of the Owner Trustee shall interfere with
the efforts of the Indenture Trustee to exercise remedies under the
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Lease or this Indenture), (C) to maintain separate insurance pursuant to
Section 9(f) of the Lease and to retain all rights with respect to such
insurance maintained for its own account, and (D) to give any notice of
default under Section 16 of the Lease;
(iii) subject to the last sentence of this clause (a), so long as no
Indenture Event of Default shall have occurred and be continuing (but
subject to the provisions of Section 8.01), the Owner Trustee shall retain
the right, to the exclusion of the Indenture Trustee, to exercise all
rights of the "Lessor" under the Lease (other than the right to receive
any funds to be delivered to the "Lessor" under the Lease (except funds
which constitute or are delivered with respect to Excepted Property)) and
under the Purchase Agreement;
(iv) subject to the last sentence of this clause (a), at all times
the Owner Trustee shall have the right as Lessor, but not to the exclusion
of the Indenture Trustee, to seek specific performance of the covenants of
the Lessee under the Lease relating to the protection, insurance,
maintenance, possession and use of the Aircraft;
(v) at all times the Owner Trustee and the Owner Participant shall
have the rights granted to them under Articles VI, VIII and X and Section
7.02 hereof; and
Notwithstanding the foregoing, but subject always to the provisions
of Section 15.05 hereof, the Indenture Trustee shall at all times have the
right, to the exclusion of the Owner Trustee and the Owner Participant, to (A)
(other than with respect to Excepted Payments) declare the Lease to be in
default under Section 17 thereof and (B) subject only to the provisions of this
Indenture (other than in connection with Excepted Payments), exercise the
remedies set forth in such Section 17 of the Lease.
(b) The leasehold interest granted to the Lessee by the Lease shall
not be subject to the security interest granted by this Indenture, and nothing
in this Indenture shall affect the rights of the Lessee under the Lease so long
as no Event of Default has occurred and is continuing.
HABENDUM CLAUSE
TO HAVE AND TO HOLD the aforesaid property unto the Indenture Trustee, its
successors and assigns, in trust for the equal and ratable benefit and security
of the Holders and the Indenture Indemnitees, except as provided in Section 2.12
and Article V hereof, without any priority of any one Equipment Note over any
other and for the uses and purposes and subject to the terms and conditions set
forth in this Indenture and the rights of the Owner Trustee and the Owner
Participant under this Indenture.
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It is expressly agreed that anything contained in this Indenture to the
contrary notwithstanding, the Owner Trustee shall remain liable under the
Indenture Documents to perform all of the obligations assumed by it under any of
those documents, all in accordance with and pursuant to the terms and provisions
of those documents, and the Indenture Trustee, the Holders and the Indenture
Indemnitees shall have no obligation or liability under the Indenture Documents
by reason of or arising out of the assignment under this Indenture, nor shall
the Indenture Trustee or the Holders or the Indenture Indemnitees be required or
obligated in any manner to perform or fulfill any obligations of the Owner
Trustee under or pursuant to the Indenture Documents or, except as expressly
provided in this Indenture, to make any payment, or to make any inquiry as to
the nature or sufficiency of any payment received by it, or present or file any
claim, or take any action to collect or enforce the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
Effective upon the occurrence and continuance of an Indenture Event of
Default, to the extent permitted by Applicable Law, the Owner Trustee hereby
constitutes the Indenture Trustee the true and lawful attorney of the Owner
Trustee, irrevocably, with full power (in the name of the Owner Trustee or
otherwise), subject to the terms and conditions of this Indenture, to ask,
require, demand, receive, compound and give acquittance for any and all Basic
Rent, Supplemental Rent payable to the Owner Trustee and Termination Value
payments, insurance proceeds and any and all moneys and claims for moneys due
and to become due under or arising out of the Lease (subject to Section 8.01
hereof) or the other Indenture Documents (other than Excepted Payments), to
endorse any checks or other instruments or orders in connection with the same
and to file any claims, take any action or institute any proceeding which the
Indenture Trustee may deem to be necessary or advisable in the premises. Without
limiting the generality of the foregoing, but subject to the rights of the Owner
Trustee and the Owner Participant under Sections 8.02, 7.02 and 7.03 hereof,
during the continuance of any Indenture Event of Default, to the extent
permitted by Applicable Law, the Indenture Trustee shall have the right under
such power of attorney to accept any offer in connection with the exercise of
remedies as set forth herein of any purchaser to purchase the Airframe and
Engines and upon such purchase to execute and deliver in the name of and on
behalf of the Owner Trustee an appropriate 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 Indenture Trustee may deem necessary or appropriate to
protect and preserve the right, title and interest of the Indenture Trustee in
and to such Rents and other sums and the security intended to be afforded
hereby; provided, however, that no action of the Indenture Trustee pursuant to
this paragraph shall increase the obligations or liabilities of the Owner
Trustee to any Person beyond those obligations and liabilities specifically set
forth in this Indenture and in the other Operative Agreements.
-6-
Under the Lease the Lessee is directed to make all payments of Rent (other
than Excepted Payments not constituting Basic Rent) payable to the Owner Trustee
and all other amounts (other than Excepted Payments not constituting Basic Rent)
which are required to be paid to or deposited with the Owner Trustee pursuant to
the Lease directly to the Indenture Trustee at such address in the United States
of America as the Indenture Trustee shall specify for application as provided in
this Indenture. The Owner Trustee agrees that if, notwithstanding such
provision, it shall have received any such amounts, promptly on receipt of any
such payment, it will transfer to the Indenture Trustee any and all moneys from
time to time received by the Owner Trustee constituting part of the Trust
Indenture Estate for distribution by the Indenture Trustee pursuant to this
Indenture, except that the Owner Trustee shall accept for distribution pursuant
to the Trust Agreement (i) any amounts distributed to it by the Indenture
Trustee under this Indenture and (ii) any Excepted Payments.
The Owner Trustee agrees that at any time and from time to time, upon the
written request of the Indenture Trustee, the Owner Trustee will, at the expense
of the Lessee, promptly and duly execute and deliver or cause to be duly
executed and delivered any and all such further instruments and documents as the
Indenture Trustee may reasonably deem desirable in obtaining the full benefits
of the assignment hereunder and of the rights and powers herein granted;
provided however, that the Owner Trustee shall have no obligation to execute and
deliver or cause to be executed or delivered to the Indenture Trustee any such
instrument or document if such execution and delivery would result in the
imposition of additional liabilities on the Owner Trustee or the Owner
Participant or would result in a burden on the Owner Participant's business
activities, unless the Owner Trustee or the Owner Participant, as the case may
be, is indemnified to its reasonable satisfaction against any losses,
liabilities and expenses incurred in connection with such execution and
delivery.
The Owner Trustee does hereby warrant and represent that it has not
assigned, pledged or otherwise disposed of, and hereby covenants that it will
not assign or pledge or otherwise dispose of, so long as the assignment
hereunder shall remain in effect and shall not have been terminated pursuant to
Section 14.01 hereof, any of its right, title or interest hereby assigned, to
anyone other than the Indenture Trustee, and that it will not, except in respect
of Excepted Payments or otherwise as provided in or permitted by this Indenture,
enter into an agreement amending or supplementing any of the Indenture
Documents, settle or compromise any claim (other than claims in respect of
Excepted Payments) against the Lessee arising under any of the Indenture
Documents, or submit or consent to the submission of any dispute, difference or
other matter arising under or in respect of any of the Indenture Documents, to
arbitration thereunder.
Concurrently with the delivery of this Indenture, the Owner Trustee has
delivered to the Indenture Trustee executed counterparts of the Trust Agreement.
It is hereby further covenanted and agreed by and between the parties as
follows:
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ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Unless the context otherwise requires,
capitalized terms utilized herein shall have the meanings set forth or
incorporated by reference, and shall be construed in the manner described, in
Appendix A to the Lease Agreement [N___] dated as of the date hereof between the
Owner Trustee and Midway Airlines Corporation.
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF EQUIPMENT NOTES
Section 2.01. Authentication and Delivery of Equipment Notes. Upon the
execution and delivery of this Indenture, and from time to time thereafter,
Equipment Notes in the aggregate principal amount set forth on Annex A hereto
shall be executed by the Owner Trustee and delivered to the Indenture Trustee
for authentication, and the Indenture Trustee shall thereupon authenticate and
deliver said Equipment Notes to or upon the oral or written order of the Owner
Trustee, signed, if written, by an authorized officer of the Owner Trustee,
without any further action by the Owner Trustee.
Section 2.02. Execution of Equipment Notes. The Equipment Notes shall be
signed on behalf of the Owner Trustee by an authorized officer of Trust Company.
Such signatures may be the manual or facsimile signatures of such officer and
minor errors or defects in any reproduction of any such signature shall not
affect the validity or enforceability of any Equipment Note which has been duly
authenticated and delivered by the Indenture Trustee. In case any officer of
Trust Company who shall have signed any of the Equipment Notes shall cease to be
such officer before the Equipment Notes so signed shall be authenticated and
delivered by the Indenture Trustee or disposed of by Trust Company, such
Equipment Note nevertheless may be authenticated and delivered or disposed of as
though the person who signed such Equipment Note had not ceased to be such
officer of Trust Company; and any Equipment Note may be signed on behalf of the
Owner Trustee by such person or persons as, at the actual date of the execution
of such Equipment Note, shall be the proper officers of Trust Company, although
at the date of the execution and delivery of this Indenture any such person was
not such an officer. Equipment Notes bearing the facsimile signatures of
individuals who were authorized officers of Trust Company at the time such
Equipment Notes were issued shall bind the Owner Trustee, notwithstanding that
such individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Equipment Notes or did not hold such offices
at the respective dates of such Equipment Notes.
-8-
Section 2.03. Authentication. Only such Equipment Notes as shall bear
thereon a certificate of authentication substantially in the form set forth in
Exhibit B, executed by the Indenture Trustee by manual signature of one of its
authorized officers, shall be entitled to the security and benefits of this
Indenture or be valid or obligatory for any purpose. Such certificate by the
Indenture Trustee upon any Equipment Note executed by the Owner Trustee shall be
conclusive evidence that the Equipment Note so authenticated has been duly
authenticated and delivered hereunder and that the Holder, as evidenced on the
Register, is entitled to the security and benefits of this Indenture.
Section 2.04. Form and Terms of Equipment Notes; Payments on Equipment
Notes. The Equipment Notes and the Indenture Trustee's certificate of
authentication shall be substantially in the form set forth in Exhibit B hereto.
The Equipment Notes shall be issuable as registered securities without coupons
and shall be numbered, lettered, or otherwise distinguished in such manner or in
accordance with such plans as the Owner Trustee may determine with the approval
of the Indenture Trustee.
The Equipment Notes shall be issued in registered form only and in
denominations of $1,000 and any integral multiple thereof, shall be dated the
Delivery Date, shall be issued in four separate series consisting of Series A,
Series B, Series C, and Series D and shall be issued in the principal amounts,
and shall bear interest at the rates per annum, specified on Annex A. Interest
shall be calculated on the basis of a 360-day year of twelve 30-day months.
Any of the Equipment Notes may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
or regulations pursuant thereto, or with the rules of any securities market in
which the Equipment Notes are admitted to trading, or to conform to general
usage.
Each Equipment Note shall bear interest from the date of original issuance
thereof or from the most recent date to which interest has been paid, and shall
be payable in arrears on _______________, 199__, and on each January 2 and July
2 thereafter until maturity; provided that, under certain circumstances provided
in the Registration Rights Agreement, including in the event a Registration
Event does not occur on or prior to the date (the "Increase Date") required
pursuant to the Registration Rights Agreement, such interest rate shall be
increased by 0.5% from and including the Increase Date to but excluding the date
such Registration Event does occur. The principal amount of each Equipment Note
shall be payable on the dates and in the installments as set forth in Annex B
hereto.
Notwithstanding the preceding paragraph, each Equipment Note shall bear
interest at the Past Due Rate on any principal, interest and any other amount
payable hereunder or under such Equipment Note, which shall not be paid in full
when due
-9-
(whether at stated maturity, by acceleration, by mandatory prepayment or
otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full, payable from time to time on demand
of the Indenture Trustee.
The principal of, and Make-Whole Premium, if any, and interest on, the
Equipment Notes shall be payable at the Corporate Trust Department of the
Indenture Trustee or at any office or agency maintained for such purpose
pursuant to Section 3.02 hereof in immediately available funds prior to 12:00
noon (New York time) on the due date thereof and the Indenture Trustee shall
remit all such amounts received by it to the Holders at such account or accounts
at such financial institution or institutions as the Holders shall have
designated to the Indenture Trustee in writing, in immediately available funds,
such payment to be made if the payment was received prior to 12:00 noon New York
time by the Indenture Trustee on any Business Day, by 1:00 p.m. New York time on
such Business Day; otherwise, the Indenture Trustee shall make payment promptly,
but not later than 11:00 A.M. New York time on the next succeeding Business Day.
If any amount payable under the Equipment Notes, or under this Indenture, falls
due on a day that is not a Business Day, then such sum shall be payable on the
next succeeding Business Day, without (provided that payment is made on such
next succeeding Business Day) additional interest thereon for the period of such
extension.
The Holder at the close of business on any Record Date with respect to any
Payment Date shall be entitled to receive the interest if any payable on such
Payment Date notwithstanding any transfer or exchange of such Equipment Note
subsequent to the Record Date and prior to such Payment Date, except if and to
the extent the Owner Trustee shall default in the payment of the interest due on
such Payment Date, in which case such defaulted interest shall be paid to the
Holder at the close of business on a subsequent Record Date (which shall be not
less than five or more than 15 Business Days prior to the date of payment of
such defaulted interest) established by notice given by mail by or on behalf of
the Owner Trustee to the Holders not less than 15 days preceding such subsequent
Record Date.
The Owner Trustee agrees to pay to the Indenture Trustee (but only to the
extent not payable under Section 6(a) or 6(b) of the Note Purchase Agreement
(whether or not in fact paid) for distribution in accordance with Section 5.04
hereof (a) any and all indemnity amounts received by the Owner Trustee which are
payable by the Lessee to (i) the Indenture Trustee in its individual capacity,
(ii) the Subordination Agent or (iii) each Liquidity Provider, in each case
pursuant to Article 6 or 7 of the Participation Agreement (it being acknowledged
that the Lessee has been instructed to pay such amounts to the Person or Persons
entitled thereto) and (b) the Owner Trustee's pro rata share of all amounts owed
to each Liquidity Provider by the Subordination Agent under each Liquidity
Facility other than amounts due as (i) repayments of the principal of advances
thereunder, (ii) interest on Downgrade Drawings and Non-Extension Drawings,
except to extent exceeding investment earnings thereon and (iii) interest on
Interest Drawings and Final Drawings except to the extent included in Net
Interest and
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Related Charges. As used in this Section, the Owner Trustee's pro rata share
means as of any time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued under
this Indenture other than the Series D Equipment Notes and the denominator
of which is the aggregate principal balance of all Equipment Notes issued
under this Indenture and the Related Indentures other than the Series D
Equipment Notes, and
(B) with respect to all Net Interest and Related Charges (x)
if there exists a Payment Default under any Equipment Note issued under
this Indenture a fraction, the numerator of which is the aggregate
principal balance then outstanding of Equipment Notes issued under this
Indenture other than the Series D Equipment Notes and the denominator of
which is the aggregate principal balance then outstanding of all Equipment
Notes issued under this Indenture and the Related Indentures other than
the Series D Equipment Notes under which there exists a Payment Default or
(y) at all other times, zero.
As used in this Section, "Net Interest and Related Charges" means the sum of (i)
the amount, if any, by which interest payable to each Liquidity Provider on any
Interest Drawing and Final Drawing exceeds the amount which would be payable if
such drawings bore interest at the weighted average Past Due Rate applicable to
amounts in default on all Equipment Notes plus (ii) any amounts payable under
Section 3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each
Liquidity Facility (or similar provisions of any replacement Liquidity Facility)
which result from any Interest Drawing or Final Drawing. As used in this
Section, a "Payment Default" when used in connection with an Equipment Note
issued hereunder or a Equipment Note issued under any Related Indenture means a
default in the payment of principal thereof or interest thereon (which default
has not been cured), other than solely because of acceleration.
Section 2.05. Payments from Trust Indenture Estate Only. All payments to
be made by the Owner Trustee under this Indenture shall be made only from the
income and the proceeds from the Lessor's Estate to the extent included in the
Trust Indenture Estate and from any other amounts of the type described in
Section 5.01 hereof (but only to the extent actually received by the Indenture
Trustee) and only to the extent that the Owner Trustee shall have sufficient
income or proceeds from the Lessor's Estate to the extent included in the Trust
Indenture Estate (and such other amounts) to enable the Indenture Trustee to
make distributions of the amounts due in respect of the Equipment Notes in
accordance with the terms hereof and thereof. Each Holder by its acceptance of a
Equipment Note agrees that it will look solely to the income and proceeds from
the Trust Indenture Estate (and such other amounts of the type described in
Section 5.01 hereof but only to the extent actually received by the Indenture
Trustee) to the extent available for distribution to it as provided herein and
that none of the Owner Participant, the Owner Trustee, Trust Company or the
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Indenture Trustee is personally liable to such Holder for any amounts payable
under this Indenture or such Equipment Note or for any amounts payable or
liability under any Equipment Note or this Indenture, except as expressly
provided herein in the case of Trust Company, the Owner Trustee or the Indenture
Trustee.
Trust Company is not personally liable to any Holder, the Lessee, the
Owner Participant or the Indenture Trustee for any amounts payable under this
Indenture or for any liability under this Indenture or the Equipment Notes,
except as a result of Trust Company's gross negligence or willful misconduct (or
simple negligence in the handling of funds), or as otherwise expressly provided
herein or in the Participation Agreement.
If (1) all or any part of the Lessor's Estate becomes the property of a
debtor subject to the reorganization provisions of the Bankruptcy Code, (2)
pursuant to such reorganization provisions any Owner Participant is required, by
reason of such Owner Participant being held to have recourse liability to the
debtor or the trustee of the debtor directly or indirectly, to make payment on
account of any amount payable as principal of or interest, Make-Whole Premium or
other amounts payable on the Equipment Notes, and (3) the Indenture Trustee
actually receives any Recourse Amount which reflects any payment by an Owner
Participant on account of (2) above, then the Indenture Trustee shall promptly
refund to such Owner Participant such Recourse Amount. Nothing contained in this
paragraph shall prevent the Indenture Trustee from enforcing any personal
recourse obligation (and retaining the proceeds thereof) of any Owner
Participant under the Participation Agreement, or from retaining any amount paid
by any Owner Participant under Sections 5.01, 8.02 and 8.03 hereof.
Section 2.06. Registration, Transfer and Exchange. The Indenture Trustee
will keep, on behalf of the Owner Trustee, at each office or agency to be
maintained for the purpose as provided in Section 3.02 hereof a Register or
Registers on which, subject to such reasonable regulations as it may prescribe,
it will register, and will register the transfer of, Equipment Notes as provided
in this Article. Such Register shall be in written form in the English language
or in any other form capable of being converted into such form within a
reasonable period of time. Upon due presentation for registration of transfer of
any Equipment Note at any such office or agency, the Owner Trustee shall execute
and the Indenture Trustee shall authenticate and deliver in the name of the
transferee or transferees, in authorized denominations, a new Equipment Note or
Equipment Notes of the same Series, and with same principal amount, interest
rate and amortization schedule, for an equal aggregate principal amount;
provided, that such Equipment Note being transferred shall be canceled in
accordance with Section 2.08 hereof simultaneously with the issuance of the new
Equipment Note. Any Equipment Note or Equipment Notes may be exchanged for an
Equipment Note or Equipment Notes of the same Series but in other authorized
denominations, in an equal aggregate principal amount. Equipment Notes to be
exchanged shall be surrendered at any office or agency to be maintained by the
Indenture Trustee for the purpose as provided in Section 3.02 hereof, and the
Owner Trustee shall execute and the Indenture Trustee shall authenticate and
deliver in exchange therefor the Equipment Note or
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Equipment Notes which the Holder making the exchange shall be entitled to
receive, bearing numbers not contemporaneously or previously outstanding.
All Equipment Notes presented for registration of transfer, exchange,
prepayment or payment shall (if so required by the Owner Trustee or the
Indenture Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Owner Trustee
and the Indenture Trustee duly executed by the Holder or its attorney duly
authorized in writing and (except in the case of transfers pursuant to Article
13 of the Participation Agreement) the Indenture Trustee may require evidence
satisfactory to it as to the compliance of any such transfer with the Securities
Act. The Indenture Trustee may require payment from the Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any exchange or registration of transfer of Equipment Notes. No
service charge shall be levied for any such transaction. The Indenture Trustee
shall not be required to exchange or register a transfer of any Equipment Notes
(a) for a period of 15 days immediately preceding the first mailing of notice of
prepayment of such Equipment Notes or (b) with respect to which notice of
prepayment has been given pursuant to Section 6.03 hereof and such notice has
not been revoked. All Equipment Notes issued upon any transfer or exchange of
Equipment Notes shall be valid obligations of the Owner Trustee, evidencing the
same debt, and entitled to the same security and benefits under this Indenture,
as the Equipment Notes surrendered upon such transfer or exchange.
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen Equipment
Notes. In case any Equipment Note shall become mutilated, defaced or be
apparently destroyed, lost or stolen, the Owner Trustee in its discretion may
execute, and upon the written request of any Holder shall execute, and the
Indenture Trustee shall authenticate and deliver in replacement thereof, a new
Equipment Note, payable to the same Holder, bearing the same principal amount
and interest rate as the Equipment Note being replaced and bearing a number not
contemporaneously or previously outstanding, in exchange and substitution for
the mutilated or defaced Equipment Note, or in lieu of and substitution for the
Equipment Note so apparently destroyed, lost or stolen. In the case of any
Equipment Note so apparently destroyed, lost or stolen, the applicant for a
substitute Equipment Note shall furnish to the Owner Trustee and to the
Indenture Trustee such security or indemnity as may be required by them to
indemnify and defend and to hold each of them harmless and evidence to their
satisfaction of the apparent destruction, loss or theft of such Equipment Note
and of the ownership thereof.
Upon the issuance of any substitute Equipment Note, the Owner Trustee or
the Indenture Trustee may require payment from the Holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses incurred in connection therewith. In
case any Equipment Note which has matured or is about to mature, or has been
called for prepayment in full, shall become mutilated or defaced or be
apparently destroyed, lost or stolen, the Owner Trustee may, instead of issuing
a substitute Equipment Note, pay or authorize
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the payment of the same (without surrender thereof except in the case of a
mutilated or defaced Equipment Note), if the applicant of any Equipment Note so
apparently destroyed, lost or stolen, for such payment shall furnish to the
Owner Trustee and to the Indenture Trustee such security or indemnity as any of
them may require to hold each of them harmless and the applicant shall also
furnish to the Owner Trustee and the Indenture Trustee evidence to their
satisfaction of the apparent destruction, loss or theft of such Equipment Note
and of the ownership thereof.
Every substitute Equipment Note issued pursuant to the provisions of this
Section by virtue of the fact that any Equipment Note is apparently destroyed,
lost or stolen shall constitute an original additional contractual obligation of
the Owner Trustee, whether or not the apparently destroyed, lost or stolen
Equipment Note shall be enforceable at any time by anyone and shall be entitled
to all the security and benefits of (but shall be subject to all the limitations
of rights set forth in) this Indenture equally and proportionately with any and
all other Equipment Notes duly authenticated and delivered hereunder. All
Equipment Notes shall be held and owned upon the express condition that, to the
extent permitted by law, the foregoing provisions are exclusive with respect to
the replacement or payment of mutilated, defaced, or apparently destroyed, lost
or stolen Equipment Notes and shall preclude any and all other rights or
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment of negotiable instruments or
other securities without their surrender.
Section 2.08. Cancellation of Equipment Notes; Destruction Thereof. All
Equipment Notes surrendered for payment, prepayment, registration of transfer or
exchange, if surrendered to the Owner Trustee or any agent of the Owner Trustee
or the Indenture Trustee, shall be delivered to the Indenture Trustee for
cancellation or, if surrendered to the Indenture Trustee, shall be canceled by
it; and no Equipment Notes shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Indenture. The Indenture Trustee
shall destroy cancelled Equipment Notes held by it and deliver a certificate of
destruction to the Owner Trustee. If the Owner Trustee shall acquire any of the
Equipment Notes, such acquisition shall not operate as a prepayment or
satisfaction of the indebtedness represented by such Equipment Notes unless and
until the same are delivered to the Indenture Trustee for cancellation.
Section 2.09. Termination of Interest in Trust Indenture Estate. A Holder
shall not, as such, have any further interest in, or other right with respect
to, the Trust Indenture Estate when and if the principal amount of and
Make-Whole Premium, if any, and interest on and other amounts due under all
Equipment Notes held by such Holder and all other sums payable to such Holder
hereunder and under the other Operative Agreements shall have been paid in full.
Section 2.10. Equipment Notes in Respect of Replacement Aircraft. Upon the
execution and delivery of a supplement to this Indenture covering a Replacement
Airframe and/or Replacement Engine, as provided in Section 9.09 hereof, each
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Equipment Note shall be deemed to have been issued in connection with such
Replacement Airframe and/or Replacement Engine and (in the case of a Replacement
Airframe) each Equipment Note issued thereafter upon a transfer or exchange of,
or as a replacement for, an Equipment Note, shall be designated as having been
issued in connection with such Replacement Airframe, but without any other
change therein except as provided for in this Article II.
Section 2.11. Assumption of Obligations Under Equipment Notes and Other
Operative Agreements. If, in accordance with and subject to the satisfaction of
the conditions set forth in Section 5.10 of the Participation Agreement, the
Lessee shall assume all of the obligations of the Owner Trustee hereunder, under
the Equipment Notes, and under all other Operative Agreements, the Owner
Participant and the Owner Trustee shall be released and discharged from any
further obligations hereunder and under the Equipment Notes and all other
Operative Agreements (except for any recourse obligations of the Owner
Participant or the Owner Trustee in its individual capacity with respect to
matters arising out of events occurring prior to such assumption).
Section 2.12. Subordination. (a) The Owner Trustee and, by acceptance of
its Equipment Notes of any Series, each Holder of such Series, hereby agree that
no payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Holder of such Series, including any payment or
distribution of cash, property or securities after the commencement of a
proceeding of the type referred to in clause (iv), (v) or (vi) of Section 7.01
hereof, except as expressly provided in Article V hereof.
(b) By the acceptance of its Equipment Notes of any Series (other than
Series A), each Holder of such Series agrees that in the event that such Holder,
in its capacity as a Holder, shall receive any payment or distribution on any
Secured Obligations in respect of such Series which it is not entitled to
receive under this Section 2.12 or Article V hereof, it will hold any amount so
received in trust for the Senior Holder (as defined in Section 2.12(c) hereof)
and will forthwith turn over such payment to the Indenture Trustee in the form
received to be applied as provided in Article V hereof.
(c) As used in this Section 2.12, the term "Senior Holder" shall mean, (i)
the Holders of Series A Equipment Notes until the Secured Obligations in respect
of Series A Equipment Notes have been paid in full, (ii) after the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, the
Holders of Series B Equipment Notes until the Secured Obligations in respect of
Series B Equipment Notes have been paid in full, (iii) after the Secured
Obligations in respect of Series B Equipment Notes have been paid in full, the
Holders of Series C Equipment Notes until the Secured Obligations in respect of
Series C Equipment Notes have been paid in full, and (iv) after the Secured
Obligations in respect of Series C Equipment Notes have been paid in full, the
Holders of Series D Equipment Notes until the Secured Obligations in respect of
Series D Equipment Notes have been paid in full.
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ARTICLE III
COVENANTS
Section 3.01. Payment of Principal, Make-Whole Premium and Interest. The
Owner Trustee covenants and agrees that it will, subject to Section 2.05 hereof,
duly and punctually pay or cause to be paid the principal of, and interest and
Make-Whole Premium, if any, and all other amounts due on, each of the Equipment
Notes and under this Indenture at the place or places, at the respective times
and in the manner provided in this Indenture and in the Equipment Notes.
Section 3.02. Offices for Payments, etc. So long as any of the Equipment
Notes remain outstanding, the Indenture Trustee will maintain the following: (a)
an office or agency where the Equipment Notes may be presented for payment and
(b) a facility or agency where the Equipment Notes may be presented for
registration of transfer and for exchange and for prepayment as provided in this
Indenture (the "Registrar"). The Registrar shall keep a register (the
"Register") with respect to the Equipment Notes and their transfer and exchange.
The Indenture Trustee may appoint one or more co-registrars ("Co-Registrars")
for the Equipment Notes and may terminate any such appointment at any time upon
written notice. The term "Registrar" includes any Co-Registrar. The Indenture
Trustee shall initially act as Registrar.
Section 3.03. Appointment to Fill a Vacancy in Office of Indenture
Trustee. The Owner Trustee, whenever necessary to avoid or fill a vacancy in the
office of Indenture Trustee, will, with the consent of the Lessee, appoint, in
the manner provided in Section 12.02 hereof, an Indenture Trustee, so that there
shall at all times be an Indenture Trustee hereunder.
Section 3.04. Paying Agents. Whenever the Indenture Trustee in its sole
discretion shall appoint a paying agent (the "Paying Agent"), it will cause the
Paying Agent to execute and deliver an instrument in which the Paying Agent
shall agree with the Indenture Trustee, subject to the provisions of this
Section:
(a) that it will hold all sums received by it as such agent
for the payment of the principal of, and interest and Make-Whole Premium,
if any, on the Equipment Notes (whether such sums have been paid to it by
the Indenture Trustee or the Owner Trustee) in trust for the benefit of
the Holders or of the Indenture Trustee, and
(b) that it will give the Indenture Trustee notice of any
failure by the Owner Trustee to make any payment of the principal of or
interest or Make-Whole Premium, if any, on the Equipment Notes when the
same shall be due and payable.
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Anything in this Section to the contrary notwithstanding, the agreements
to hold sums in trust as provided in this Section are subject to the provisions
of Sections 14.03 and 14.04 hereof.
Section 3.05. Covenants of the Owner Trustee.
(a) The Owner Trustee hereby covenants and agrees as follows:
(i) in the event a Responsible Officer of the Owner Trustee
shall have actual knowledge of an Indenture Event of Default, an Indenture
Default or an Event of Loss, the Owner Trustee will give prompt written
notice of such Indenture Event of Default, Indenture Default or Event of
Loss to the Indenture Trustee, the Lessee and the Owner Participant;
(ii) the Owner Trustee will furnish to the Indenture Trustee,
promptly upon receipt thereof by a Responsible Officer of the Owner
Trustee, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and other instruments furnished to the
Owner Trustee under the Lease, including, without limitation, a copy of
each report or notice from an insurer or an insurance broker received
pursuant to Section 9 of the Lease, to the extent that the Operative
Documents do not provide that the same shall have been furnished to the
Indenture Trustee;
(iii) the Owner Trustee will not enter into any business or
other activity other than the business of owning the Aircraft, the leasing
thereof to the Lessee and the carrying out of the transactions
contemplated hereby and by the Lease, the Participation Agreement, the
Trust Agreement and the other Indenture Documents; and
(iv) except as contemplated by the Operative Agreements, the
Owner Trustee will not contract for, create, incur or assume any debt, and
will not guarantee (directly or indirectly or by an instrument having the
effect of assuring another's payment or performance on any obligation or
capability of so doing, or otherwise), endorse or otherwise take action to
become contingently liable, directly or indirectly, in connection with the
debt of any other Person.
Section 3.06. [Reserved]
Section 3.07. Disposal of Trust Indenture Estate. At any time and from
time to time any part of the Trust Indenture Estate may be sold or disposed of
in accordance with the provisions of this Indenture and the Lease. The Indenture
Trustee shall, from time to time, release any part of the Trust Indenture Estate
so sold or disposed of or as to which an Event of Loss has occurred or as to
which the Lease has been terminated from the Lien of this Indenture. In
addition, to the extent that such property constitutes an Airframe or Engine,
the further requirements of Section 9.08 hereof shall be satisfied.
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Section 3.08. No Representations or Warranties as to Aircraft or
Documents. NEITHER THE INDENTURE TRUSTEE NOR THE OWNER TRUSTEE NOR TRUST COMPANY
NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS,
WORKMANSHIP, VALUE, CONDITION, DESIGN, COMPLIANCE WITH SPECIFICATIONS,
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR USE OR PURPOSE OF THE AIRCRAFT OR
ANY ENGINE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR
ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE
WHATSOEVER, except that Trust Company warrants that on the Delivery Date (a) the
Owner Trustee shall have received whatever title was conveyed to it by the
Seller, and (b) the Aircraft shall be free and clear of Lessor's Liens
attributable to Trust Company. Neither Trust Company nor the Indenture Trustee
makes or shall be deemed to have made any representation or warranty as to the
validity, legality or enforceability of this Indenture, the Trust Agreement, the
Equipment Notes or any Indenture Document or as to the correctness of any
statement contained in any thereof, except for the representations and
warranties of Trust Company and the Indenture Trustee made under this Indenture
or in the Participation Agreement or of the Owner Participant made under the
Participation Agreement.
Section 3.09. Further Assurances; Financing Statements. At any time and
from time to time, upon the request of the Indenture Trustee or the Lessee, at
the expense of the Lessee, the Owner Trustee shall promptly and duly execute and
deliver any and all such further instruments and documents as may be specified
in such request and as are necessary or advisable to perfect, preserve or
protect the Liens and assignments created or intended to be created hereby, or
to obtain for the Indenture Trustee the full benefit of the specific rights and
powers granted herein, including, without limitation, the execution and delivery
of Uniform Commercial Code financing statements and continuation statements with
respect thereto, or similar instruments relating to the perfection of the Liens
or assignments created or intended to be created hereby.
ARTICLE IV
HOLDER LISTS
Section 4.01. Holder Lists: Ownership of Equipment Notes. (a) The
Indenture Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Indenture Trustee is not the Registrar, the Registrar shall
furnish to the Indenture Trustee semi-annually not more than ten days after each
Record Date, as of such Record Date, or at such other times as the Indenture
Trustee may request in writing, a list, in such form and as of such date as the
Indenture Trustee may reasonably
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require, containing all the information in the possession or control of the
Registrar as to the names and addresses of the Holders and the amounts and
Maturities of the Equipment Notes held by such Holders.
(b) Ownership of the Equipment Notes shall be proved by the Register kept
by the Registrar.
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
Section 5.01. Basic Rent Distribution. Except as otherwise provided in
Section 5.03 hereof, each installment of Basic Rent, any payment of interest on
overdue installments of Basic Rent and any payment received by the Indenture
Trustee pursuant to Section 8.03(a) hereof and shall be distributed by the
Indenture Trustee no later than the time herein provided in the following order
of priority:
first, (i) so much of such installment or payment as shall be required to
pay in full the aggregate amount of principal and interest (as well
as any interest on any overdue principal and, to the extent
permitted by applicable law, on any overdue interest) then due under
all Series A Equipment Notes shall be distributed to the Holders of
Series A Equipment Notes ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments
then due under each Series A Equipment Note bears to the aggregate
amount of the payments then due under all Series A Equipment Notes;
(ii) after giving effect to paragraph (i) above, so much of such
installment or payment as shall be required to pay in full the
aggregate amount of principal and interest (as well as any interest
on any overdue principal and, to the extent permitted by applicable
law, on any overdue interest) then due under all Series B Equipment
Notes shall be distributed to the Holders of Series B Equipment
Notes ratably, without priority of one over the other, in the
proportion that the amount of such payment or payments then due
under each Series B Equipment Note bears to the aggregate amount of
the payments then due under all Series B Equipment Notes;
(iii) after giving effect to paragraph (ii) above, so much of such
installment or payment as shall be required to pay in full the
aggregate amount of principal and interest (as well as any interest
on any overdue principal and, to the extent permitted by applicable
law, on any overdue interest) then due under all Series C Equipment
Notes shall be distributed
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to the Holders of Series C Equipment Notes ratably, without priority
of one over the other, in the proportion that the amount of such
payment or payments then due under each Series C Equipment Note
bears to the aggregate amount of the payments then due under all
Series C Equipment Notes; and
(iv) after giving effect to paragraph (iii) above, so much of such
installment or payment as shall be required to pay in full the
aggregate amount of principal and interest (as well as any interest
on any overdue principal and, to the extent permitted by applicable
law, on any overdue interest) then due under all Series D Equipment
Notes shall be distributed to the Holders of Series D Equipment
Notes ratably, without priority of one over the other, in the
proportion that the amount of such payment or payments then due
under each Series D Equipment Note bears to the aggregate amount of
the payments then due under all Series D Equipment Notes; and
second, the balance if any of such installment or payment remaining
thereafter shall be distributed to the Owner Trustee for
distribution pursuant to the Trust Agreement; provided, however,
that if an Event of Default shall have occurred and be continuing,
then such balance shall not be distributed as provided in this
clause "second" but shall be held by the Indenture Trustee as part
of the Trust Indenture Estate and invested in accordance with
Section 5.08 hereof until whichever of the following shall first
occur: (i) all Events of Default shall have been cured or waived, in
which event such balance shall be distributed as provided in this
clause "second", (ii) Section 5.03 hereof shall be applicable, in
which event such balance shall be distributed in accordance with the
provisions of such Section 5.03, or (iii) the 120th day after the
receipt of such payment in which case such payment shall be
distributed as provided in this clause "second".
Section 5.02. Event of Loss and Replacement; Prepayment. (a) Except as
otherwise provided in Section 5.03 hereof, any payment received by the Indenture
Trustee as the result of or in connection with an Event of Loss with respect to
the Aircraft (and with respect to which the Lessee has not made the replacement
election in Section 8(a)(i) of the Lease) or as the result of, or in connection
with any event under the Lease giving rise to, a prepayment pursuant to Section
6.02 hereof, shall be promptly distributed by the Indenture Trustee in the
following order of priority:
first, to reimburse the Indenture Trustee and the Holders for any costs or
expenses reasonably incurred in connection with such prepayment and
(b) then to pay any other similar amounts then due to the other
Indenture Indemnitees;
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second, (i) to pay the amounts specified in paragraph (i) of clause "second"
of Section 5.03 hereof then due and payable in respect of the Series
A Equipment Notes;
(ii) after giving effect to paragraph (i) above, to pay the amounts
specified in paragraph (ii) of clause "second" of Section 5.03
hereof then due and payable in respect of the Series B Equipment
Notes;
(iii) after giving effect to paragraph (ii) above, to pay the
amounts specified in paragraph (iii) of clause "second" of Section
5.03 hereof then due and payable in respect of the Series C
Equipment Notes; and
(iv) after giving effect to paragraph (iii) above, to pay the
amounts specified in paragraph (iv) of clause "second" of Section
5.03 hereof then due and payable in respect of the Series D
Equipment Notes;
provided, that payments pursuant to this clause "second" shall be
made without the payment of Make-Whole Premium; and
third, as provided in clause "third" of Section 5.03 hereof;
provided that if a Replacement Airframe shall be substituted for an Airframe
subject to an Event of Loss as provided in Section 8(a)(i) of the Lease and
Section 9.08 hereof, any proceeds which result from such Event of Loss and are
paid to the Indenture Trustee shall be held by the Indenture Trustee as part of
the Trust Indenture Estate and, unless otherwise applied pursuant to Section
5.01 or 5.03 hereof, such proceeds shall be released to the Lessee upon the
release of such damaged Airframe and the replacement thereof as herein provided.
(b) Any amounts received directly or indirectly from any governmental
authority, insurer or other party pursuant to any provision of Section 8 or 9 of
the Lease as the result of loss or damage not constituting an Event of Loss with
respect to the Aircraft, or as a result of such loss or damage constituting an
Event of Loss if and to the extent that such amounts would at the time be
required to be paid to the Lessee pursuant to Section 8 or 9 but for the fact
that a Specified Default exists shall be held by the Indenture Trustee as
security for the obligations of the Lessee under the Lease and the Participation
Agreement and shall be invested in accordance with the terms of Section 5.08
hereof and at such time as the conditions for payment to the Lessee specified in
Section 8 or 9, as the case may be, shall be fulfilled and no Specified Default
exists, such amount, and the proceeds of any investment thereof, shall, to the
extent not theretofore applied, be paid to the Lessee to the extent provided in
the Lease.
Section 5.03. Payment After Indenture Event of Default, etc. Except as
otherwise provided in Sections 5.02(b), 5.04(b), 5.04(c) and 5.05 hereof, all
payments (other than Excepted Payments) received and all amounts held or
realized by the Indenture Trustee after an Indenture Event of Default shall have
occurred and be
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continuing and the Equipment Notes shall have become due and payable as provided
in Section 7.02(b) or (c) hereof, shall be promptly distributed by the Indenture
Trustee in the following order of priority:
first, so much of such payments or amounts as shall be required to pay or
reimburse (i) the Indenture Trustee for any tax (except to the
extent resulting from a failure of the Indenture Trustee to withhold
pursuant to Section 5.09 hereof), expense, charge or other loss
(including, without limitation, all amounts to be expended at the
expense of, or charged upon the tolls, rents, revenues, issues,
products and profits of, the property included in the Trust
Indenture Estate pursuant to Section 7.03(b) hereof) incurred by the
Indenture Trustee (to the extent not previously reimbursed), the
expenses of any sale, taking or other proceeding, attorneys' fees
and expenses, court costs, and any other expenditures incurred or
expenditures or advances made by the Indenture Trustee or the
Holders in the protection, exercise or enforcement of any right,
power or remedy or any damages sustained by the Indenture Trustee or
the Holders, liquidated or otherwise, upon such Indenture Event of
Default, shall be applied by the Indenture Trustee as between itself
and the Holders in reimbursement of such expenses and (ii) all
similar amounts payable to the other Indenture Indemnitees hereunder
and under the Participation Agreement; and in the case the aggregate
amount to be so distributed is insufficient to pay as set forth in
this clause "first", then ratably, without priority of one over the
other, in proportion to the amounts owed each hereunder;
second, so much of such payments or amounts remaining as shall be required
to reimburse the then existing or prior Holders for payments made
pursuant to Section 9.03(d) hereof (to the extent not previously
reimbursed) shall be distributed to such then existing or prior
Holders ratably, without priority of one over the other, in
accordance with the amount of the payment or payments made by each
such then existing or prior Holder pursuant to said Section 9.03(d)
hereof;
third, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid principal amount of all
Series A Equipment Notes, and the accrued but unpaid interest and
other amounts due thereon and all other Secured Obligations (other
than Make- Whole Premium) in respect of the Series A Equipment Notes
to the date of distribution, shall be distributed to the Holders of
Series A Equipment Notes, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion
that the aggregate unpaid Principal Amount of all Series A Equipment
Notes held by each Holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder (other than Make-Whole
Premium) to the date of distribution,
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bears to the aggregate unpaid Principal Amount of all Series A
Equipment Notes held by all such Holders plus the accrued but unpaid
interest and other amounts due thereon (other than Make-Whole
Premium) to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in full
the aggregate unpaid principal amount of all Series B Equipment
Notes, and the accrued but unpaid interest and other amounts due
thereon and all other Secured Obligations (other than Make-Whole
Premium) in respect of the Series B Equipment Notes to the date of
distribution, shall be distributed to the Holders of Series B
Equipment Notes, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion
that the aggregate unpaid Principal Amount of all Series B Equipment
Notes held by each Holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder (other than Make-Whole
Premium) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series B Equipment Notes held by all such
Holders plus the accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Premium) to the date of distribution;
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series C Equipment
Notes, and the accrued but unpaid interest and other amounts due
thereon and all other Secured Obligations (other than Make-Whole
Premium) in respect of the Series C Equipment Notes to the date of
distribution, shall be distributed to the Holders of Series C
Equipment Notes, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion
that the aggregate unpaid Principal Amount of all Series C Equipment
Notes held by each Holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder (other than Make-Whole
Premium) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series C Equipment Notes held by all such
Holders plus the accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Premium) to the date of distribution;
and
(iv) after giving effect to paragraph (iii) above, so much of such
payments or amounts remaining as shall be required to pay in full
the aggregate unpaid principal amount of all Series D Equipment
Notes, and the accrued but unpaid interest and other amounts due
thereon and all other Secured Obligations (other than Make-Whole
Premium) in respect of the Series D Equipment Notes to the date of
distribution, shall be
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distributed to the Holders of Series D Equipment Notes, and in case
the aggregate amount so to be distributed shall be insufficient to
pay in full as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid Principal
Amount of all Series D Equipment Notes held by each Holder plus the
accrued but unpaid interest and other amounts due hereunder or
thereunder (other than Make-Whole Premium) to the date of
distribution, bears to the aggregate unpaid Principal Amount of all
Series D Equipment Notes held by all such Holders plus the accrued
but unpaid interest and other amounts due thereon (other than
Make-Whole Premium) to the date of distribution;
(it being understood that amounts payable under this clause "second"
shall not in any event include Make-Whole Premium); and
fourth, the balance, if any of such payments or amounts remaining thereafter
shall be distributed to the Owner Trustee for distribution pursuant
to the Trust Agreement.
Section 5.04. Certain Payments. (a) Any payments received by the Indenture
Trustee which are to be held or applied according to any provision in any other
Indenture Document shall be held or applied thereunder in accordance therewith,
except to the extent this Indenture expressly provides for such payments to be
held or applied in a different manner.
(b) Notwithstanding anything to the contrary contained in this Article V,
the Indenture Trustee will distribute, promptly upon receipt, any indemnity or
other payment received by it from the Owner Trustee or the Lessee in respect of
(i) the Indenture Trustee in its individual capacity, (ii) the Subordination
Agent, (iii) each Liquidity Provider, (iv) the Pass-Through Trustee, and (v) any
other Indenture Indemnitee, in each case whether pursuant to Article 6 or 7 of
the Participation Agreement or as Supplemental Rent, directly to the Person
(which may include the Indenture Trustee) entitled thereto. Any payment received
by the Indenture Trustee under clause (b) of the last paragraph of Section 2.04
shall be distributed to the Subordination Agent to be distributed in accordance
with the terms of the Intercreditor Agreement.
(c) Notwithstanding anything to the contrary contained herein, any sums
received by the Indenture Trustee which constitute Excepted Payments shall be
distributed promptly upon receipt by the Indenture Trustee directly to the
Person or Persons entitled thereto.
(d) Notwithstanding any provision of this Indenture to the contrary, any
amounts held by Indenture Trustee pursuant to the terms of the Lease shall be
held by the Indenture Trustee as security for the obligations of Lessee under
the Indenture
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Documents and, if and when required by the Lease, paid and/or applied in
accordance with the applicable provisions of the lease.
Section 5.05. Other Payments. Any payments received by the Indenture
Trustee for which no provision as to the application thereof is made elsewhere
in this Indenture or in any other Indenture Document shall be distributed by the
Indenture Trustee (a) to the extent received or realized at any time prior to
the payment in full of all obligations to the Holders, in the order of priority
specified in Section 5.01 hereof, and (b) to the extent received or realized at
any time after payment in full of all obligations to the Holders, in the
following order of priority:
first, in the manner provided in clause "first" of Section 5.03 hereof, and
second, in the manner provided in clause "third" of Section 5.03 hereof.
Section 5.06. Payments to Owner Trustee. Any amounts distributed hereunder
by the Indenture Trustee to the Owner Trustee shall be paid to the Owner Trustee
by wire transfer of immediately available funds of the type received by the
Indenture Trustee at such office and to such account or accounts of such entity
or entities as shall be designated by notice from the Owner Trustee to the
Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the Indenture Trustee receives notice to
the contrary from the Owner Trustee, all amounts to be distributed to the Owner
Trustee hereunder for distribution in accordance with the Trust Agreement shall
be distributed by wire transfer of immediately available funds of the type
received by the Indenture Trustee to such account of the Owner Participant as
may be specified pursuant to Section 2.06 of the Trust Agreement.
Section 5.07. Application of Payments. Each payment of principal of and
interest or other amounts due on each Equipment Note shall, except as otherwise
provided herein, be applied,
first, to the payment of interest on such Equipment Note due and payable to
the date of such payment, as provided in such Certificate, as well
as any interest on overdue principal and Make-Whole Premium, if any,
and, to the extent permitted by law, interest and other amounts due
thereunder,
second, the payment of any other amount (other than the principal of such
Equipment Note), including any Make-Whole Premium, due hereunder to
the Holder of such Equipment Note or under such Equipment Note; and
third, to the payment of the principal of such Equipment Note if then due
hereunder or under such Equipment Note.
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Section 5.08. Investment of Amounts Held by Indenture Trustee. Amounts
held by the Indenture Trustee pursuant to Section 5.02(b) hereof or pursuant to
any provision of any Indenture Document providing for investment by the
Indenture Trustee of sums pursuant to Section 15 of the Lease or this Section
5.08 shall be invested by the Indenture Trustee from time to time in securities
selected by (i) so long as no Event of Default shall have occurred and be
continuing, the Lessee (and in the absence of written direction by the Lessee,
the Indenture Trustee shall invest such monies in direct obligations of the
United States of America) or (ii) so long as an Event of Default shall have
occurred and be continuing, the Indenture Trustee and in each case shall be of
the type meeting the criteria for Permitted Investments. Unless otherwise
expressly provided in this Indenture, any income realized as a result of any
such investment, net of the Indenture Trustee's reasonable fees and expenses in
making such investment, shall be held and applied by the Indenture Trustee in
the same manner as the principal amount of such investment is to be applied and
any losses, net of earnings and such reasonable fees and expenses, shall be
charged against the principal amount invested. The Lessee shall be responsible
for and will promptly pay to the Indenture Trustee or the Owner Trustee, as the
case may be, on demand, the amount of any loss realized as the result of any
such investment (together with any fees, commissions and other costs and
expenses, if any, incurred by the Indenture Trustee or the Owner Trustee in
connection with such investment), such amount to be disposed of in accordance
with the terms hereof or the Lease, as the case may be. The Indenture Trustee
shall not be liable for any loss resulting from any investment made by it or any
investment sold by it under this Indenture in accordance with instructions from
the Lessee other than by reason of its willful misconduct or gross negligence,
and any such investment may be sold (without regard to its maturity) by the
Indenture Trustee without instructions whenever the Indenture Trustee reasonably
believes such sale is necessary to make a distribution required by this
Indenture.
Unless otherwise confirmed in writing, an account statement delivered by
the Indenture Trustee to the Owner Trustee (with a copy to the Lessee) shall be
deemed written confirmation by the Owner Trustee that the investment
transactions identified therein accurately reflect the investment directions
given to the Indenture Trustee by or on behalf of the Lessee, unless the Lessee
notifies the Indenture Trustee in writing to the contrary within 30 days of the
date of receipt of such statement.
Section 5.09. Withholding Taxes. The Indenture Trustee, as agent for the
Owner Trustee, shall exclude and withhold from each payment of principal,
premium, if any, and interest and other amounts due hereunder or under the
Equipment Notes, any and all withholding taxes applicable thereto as required by
law. The Indenture Trustee agrees to act as such withholding agent and, in
connection therewith, whenever any present or future taxes or similar charges
are required to be withheld with respect to any amounts payable in respect of
the Equipment Notes, it will withhold such amounts and timely pay the same to
the appropriate authority in the name of and on behalf of the Holders, it will
file any necessary withholding tax returns or statements when due, and that, as
promptly as possible after the payment thereof, it will deliver to each Holder
appropriate documentation showing the payment thereof, together with
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such additional documentary evidence as such Holder may reasonably request from
time to time.
ARTICLE VI
PREPAYMENT OF EQUIPMENT NOTES
Section 6.01. No Prepayment Except as Specified. Except as provided in
Sections 6.02 and 8.02 hereof, the Equipment Notes may not be prepaid.
Section 6.02. Prepayment of Equipment Notes. (a) The Outstanding Equipment
Notes shall be prepaid in full and not in part:
(i) If an Event of Loss occurs with respect to the Airframe or
with respect to the Airframe and the Engines or engines then installed on
the Airframe (unless pursuant to Section 8(a)(i) of the Lease and Section
9.08 hereof replacement equipment is substituted therefor);
(ii) If the Lessee, pursuant to Section 13(b) of the Lease,
gives notice of purchase of the Aircraft (and Section 2.11 hereof is not
applicable in connection with such purchase);
(iii) If the Owner Participant, or the Owner Trustee on behalf
of the Owner Participant, gives notice of prepayment to the Indenture
Trustee pursuant to Section 8.02 hereof;
(iv) If the Lessee, pursuant to Section 14(a) of the Lease,
gives notice of a voluntary termination for obsolescence or surplus, but
subject to Section 6.02(c) below;
(v) Pursuant to Section 13.01 of the Participation Agreement
in connection with a refinancing of the Equipment Notes, but subject to
Section 6.02(c) below; or
(vi) At the option of the Owner Trustee, with the prior
written consent of the Lessee and the Owner Participant, upon not less
than 25 days' prior written notice.
(b) In the event of a prepayment of the Equipment Notes pursuant to
Sections 6.02(a)(ii), (iv) and (v) above, the Owner Trustee, a Responsible
Officer of which having received notice from the Lessee in accordance with and
subject to the terms of Section 13(b) or 14(a) of the Lease or Article 13 of the
Participation Agreement, as the case may be, shall give written notice to the
Indenture Trustee and to the Holders of all of the Equipment Notes specifying
the Business Day on which the Equipment Notes shall be prepaid. In the case of a
prepayment of the Equipment Notes pursuant to Section
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6.02(a)(i) above, the Equipment Notes shall be prepaid in full on the Loss
Payment Date specified in Section 8(a)(ii) of the Lease. In the case of a
prepayment of the Equipment Notes pursuant to Section 6.02(a)(iii) above, the
Equipment Notes shall be prepaid in full on the date so designated in the notice
referred to in Section 8.02 hereof. In the case of a prepayment of the Equipment
Notes pursuant to Section 6.02(a)(ii) or (iv) above, the Equipment Notes shall
be prepaid in full on the Termination Date. In the case of a prepayment of the
Equipment Notes pursuant to Section 6.02(a)(v) above, the Equipment Notes shall
be prepaid on the effective date of the Refinancing. In the case of a prepayment
of the Equipment Notes pursuant to Section 6.02(a)(vi) above, the Equipment
Notes shall be prepaid on the date designated in the notice referred to therein.
The day on which the Equipment Notes are to be prepaid pursuant to this Section
6.02(b) is herein referred to as the "Prepayment Date".
On or prior to the Prepayment Date, immediately available funds shall be
deposited with the Indenture Trustee in an amount in respect of the Equipment
Notes equal to:
(1) if such prepayment is made pursuant to Section 6.02(a)(i)
or (iii) (if clause (i), but not clause (ii) or clause (iii) of the first
sentence of Section 8.02(a) of the Indenture is applicable and such
prepayment is made when an Event of Default has occurred and been
continuing for 180 days or more, or if clause (ii) or clause (iii) of the
first sentence of Section 8.02(a) hereof is applicable), the sum of (A)
the aggregate principal amount of such Equipment Notes then Outstanding,
(B) accrued interest on the Equipment Notes to the Prepayment Date and (C)
all other aggregate sums due the Indenture Trustee hereunder or under the
Participation Agreement or the Lease, but excluding any Make-Whole Premium
or other premium or penalty, or
(2) if such prepayment is made pursuant to Section
6.02(a)(ii), 6.02(a)(iii) (if clause (i), but not clause (ii) or clause
(iii) of the first sentence of Section 8.02(a) of the Indenture is
applicable and such prepayment is made when an Event of Default has
occurred and been continuing for less than 180 days) 6.02(a)(iv),
6.02(a)(v) or 6.02(a)(vi) above, the sum of the amounts specified in
clauses (A), (B) and (C) of the preceding clause (1) plus any Make-Whole
Premium payable in respect of all Equipment Notes
(the aggregate amount required to be paid pursuant to this sentence being herein
referred to as the "Prepayment Price").
(c) Notwithstanding the foregoing provisions of this Section 6.02, if (x)
a prepayment notice has been given in respect of Section 6.02(a)(iv) and no
termination of the Lease actually occurs or (y) a prepayment notice has been
given in respect of Section 6.02(a)(v) and no refinancing shall occur pursuant
to Article 13 of the Participation Agreement, any notice of prepayment given
pursuant to Section 6.02(b) in respect thereof shall be deemed revoked.
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Section 6.03. Notice of Prepayment to Holders. In order to effect any
prepayment set forth in Section 6.02(a) hereof, the Indenture Trustee shall give
prompt notice by first class mail of prepayment to each Holder. Any notice of
prepayment given by the Owner Trustee shall be irrevocable except (x) as
provided in Section 6.02(c) or (y) in the case of a notice given pursuant to
Section 6.02(a)(vi), which notice may be revoked by the Owner Trustee at any
time on or before the third Business Day preceding the Prepayment Date by prompt
notice to the Holders.
All notices of prepayment shall state: (1) the Prepayment Date, (2) the
applicable basis for determining the Prepayment Price, (3) that on the
Prepayment Date, subject to the provisions hereof, the Prepayment Price will
become due and payable, and that interest on the Equipment Notes shall cease to
accrue on and after such Prepayment Date, and (4) the place or places where such
Equipment Notes are to be surrendered for payment.
Section 6.04. Deposit of Prepayment Price. On the Prepayment Date, the
Owner Trustee shall, to the extent an amount equal to the Prepayment Price shall
not then be held in cash by the Indenture Trustee in immediately available funds
and deposited for the purpose, pay to the Indenture Trustee an amount equal to
the difference between (a) the amount then so held and (b) the Prepayment Price.
If there shall so be on deposit and/or deposited the applicable Prepayment Price
on or prior to a Prepayment Date, interest shall cease to accrue in respect of
all the Outstanding Equipment Notes on and after such Prepayment Date.
Section 6.05. Equipment Notes Payable on Prepayment Date. On the
Prepayment Date, the Outstanding Equipment Notes shall (except (A) if the Owner
Trustee has requested the Indenture Trustee to revoke such notice of prepayment
in accordance with Section 6.03 hereof or such notice is deemed to be revoked
pursuant to Section 6.02(c) hereof or (B) as otherwise provided in the Lease)
become due and payable and from and after such Prepayment Date (unless there
shall be a default in the payment of the Prepayment Price) such Equipment Notes
shall cease to bear interest. Upon surrender by any Holder of its Equipment Note
for prepayment in accordance with said notice, such Holder shall be paid the
principal amount of its Equipment Note then outstanding, accrued interest
thereon to the Prepayment Date, all other sums due to such Holder hereunder
plus, if a Make-Whole Premium is payable pursuant to Section 6.02(b) hereof, the
Make-Whole Premium in respect of such Equipment Certificate.
If any Equipment Note called for prepayment shall not be so paid upon
timely surrender thereof for prepayment, the principal shall, until paid,
continue to bear interest from the Prepayment Date at the interest rate
applicable to such Equipment Note.
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ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
Section 7.01. Indenture Event of Default. "Indenture Event of Default"
means any of the following events (whatever the reason for such Indenture Event
of Default and whether it shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) any Event of Default specified in Section 16 of the Lease
(other than an Event of Default arising solely as the result of the
failure to make an Excepted Payment unless the Owner Participant shall
notify the Indenture Trustee in writing that such failure shall constitute
an Indenture Event of Default); or
(ii) the failure of the Owner Trustee other than by reason of
a Default or an Event of Default (i) to pay principal, interest or
Make-Whole Premium, if any, on any Equipment Note when due, and such
failure shall have continued unremedied for ten Business Days after the
date when due or (ii) to pay any other amounts hereunder or under the
Equipment Notes when due and such failure shall have continued unremedied
for a period of 30 days after the Owner Trustee and the Owner Participant
shall receive written demand therefor from the Indenture Trustee or by any
Holder; or
(iii) (A) any representation or warranty made by the Owner
Trustee, the Owner Participant or any Owner Participant Guarantor in any
Operative Agreement or in any certificate the Owner Trustee, the Owner
Participant or any Owner Participant Guarantor furnished to the Indenture
Trustee or any Holder in connection herewith or therewith or pursuant
hereto or thereto shall prove to have been false or incorrect in any
material respect when made and was and remains in any respect materially
adverse to the interests of the Holders and such misrepresentation shall
not have been corrected within 30 days following notice thereof identified
as a "Notice of Indenture Event of Default" being given to the Owner
Trustee and the Owner Participant by the Indenture Trustee or by a
Majority in Interest of Holders, unless such misrepresentation is capable
of being corrected, and Owner Trustee or Owner Participant shall, after
the delivery of such notice, be diligently proceeding to correct such
misrepresentation and shall in fact correct such misrepresentation within
60 days after delivery of such notice; or
(B) any (x) covenant made by the Owner Trustee in the fifth
paragraph following the Habendum Clause hereof or in Section 5.02(b) of
the Participation Agreement shall be breached in any material respect and
any such
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breach shall not be cured within 10 Business Days after the Owner
Participant has received notice thereof from any Holder or the Indenture
Trustee (for purposes of Section 7.02(b) of the Participation Agreement,
it being agreed that such breach may be cured by replacement of the Owner
Trustee), or (y) any other covenant made by the Owner Trustee, by the
Owner Participant or by any Owner Participant Guarantor in any Operative
Agreement shall be breached in any material respect and such breach shall
remain unremedied for a period of 30 days after there has been given to
the Owner Trustee and the Owner Participant by Holders holding not less
than a Majority in Interest of Holders a written notice identified as a
"Notice of Indenture Event of Default" specifying such breach and
requiring it to be remedied unless such failure is curable and the Owner
Trustee or the Owner Participant shall, after the delivery of such notice,
be diligently proceeding to correct such failure and shall in fact correct
such failure 60 days after delivery of such notice; or
(iv) the Owner Trustee, the Lessor's Estate, the Owner
Participant or any Owner Participant Guarantor shall file any petition or
answer seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present
or future bankruptcy, insolvency or similar statute, law or regulation;
(v) an order for relief shall be entered in respect of the
Owner Trustee, the Owner Participant or any Owner Participant Guarantor or
the Lessor's Estate by a court having jurisdiction in the premises in an
involuntary case under the federal bankruptcy laws as now or hereafter in
effect; or the Owner Trustee, the Owner Participant or any Owner
Participant Guarantor or the Lessor's Estate shall file any answer
admitting or not contesting the material allegations of a petition filed
against the Owner Trustee, the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate in any proceeding referred to in clause
(vi) below or seek or consent or acquiesce in the appointment of any
trustee, custodian, receiver or liquidator of the Owner Trustee, the Owner
Participant or any Owner Participant Guarantor or the Lessor's Estate, as
the case may be, or of all or any substantial part of its properties; or
(vi) without the consent or acquiescence of the Owner Trustee,
the Owner Participant or any Owner Participant Guarantor or the Lessor's
Estate, as the case may be, an order shall be entered constituting an
order for relief or approving a petition for relief or reorganization or
any other petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or other similar relief under any
present or future bankruptcy, insolvency or similar statute, law or
regulation, or if any such petition shall be filed against the Owner
Trustee, the Owner Participant or any Owner Participant Guarantor or the
Lessor's Estate, as the case may be, and such petition shall not be
dismissed within 60 days, or if, without the consent or acquiescence of
the Owner Trustee, the Owner Participant or any Owner
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Participant Guarantor or the Lessor's Estate, as the case may be, an order
shall be entered appointing a trustee, custodian, receiver or liquidator
of the Owner Trustee, the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate, as the case may be, or of all or any
substantial part of the properties of the Owner Trustee, the Owner
Participant or any Owner Participant Guarantor or the Lessor's Estate, as
the case may be, and such order shall not be dismissed within 60 days;
Section 7.02. Remedies. (a) If an Indenture Event of Default shall have
occurred and be continuing and so long as the same shall be continuing
unremedied, then and in every such case, the Indenture Trustee may, and when
required by the provisions of Article IX or Section 7.02(c) hereof, shall (i)
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article VII, and (ii) in the event such Indenture
Event of Default is an Indenture Event of Default referred to in clause (i) of
Section 7.01 hereof, exercise any and all of the remedies pursuant to Section 17
of the Lease; provided that without the consent of the Owner Trustee and the
Owner Participant such exercise of remedies shall not occur until after the
latest date on which the Owner Trustee may cure the related Event of Default
pursuant to Section 8.03 hereof. The Indenture Trustee may (subject to the
provisions of the next succeeding paragraph) take possession of all or any part
of the properties covered or intended to be covered by the Lien and security
interest created hereby or pursuant hereto and may exclude the Owner
Participant, the Owner Trustee, the Lessee and any transferee of the Lessee
(subject to Section 15.05 hereof), and all Persons claiming under any of them
wholly or partly therefrom. In addition, the Indenture Trustee may (subject to
the provisions of the next succeeding paragraph) exercise any other right or
remedy in lieu of or in addition to the foregoing that may be available to it
under applicable law, or proceed by appropriate court action to enforce the
terms hereof, of the Lease, or both, or to rescind the Lease. Without limiting
any of the foregoing, it is understood and agreed that the Indenture Trustee may
exercise any right of sale of the Aircraft available to it, even though it shall
not have taken possession of the Aircraft and shall not have possession thereof
at the time of such sale.
Anything in this Indenture to the contrary notwithstanding, the Indenture
Trustee shall not be entitled to exercise any remedy hereunder as a result of an
Indenture Event of Default which arises solely by reason of one or more events
or circumstances which constitute a Lease Event of Default unless the Indenture
Trustee as security assignee of the Owner Trustee shall have declared the Lease
to be in default and shall have exercised or concurrently be exercising one or
more of the dispossessory remedies provided for in Section 17 of the Lease with
respect to the Aircraft; provided, however, that such requirement to exercise
one or more of such remedies under the Lease shall not apply in circumstances
where the Indenture Trustee is, and has been, for a continuous period in excess
of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of
the Bankruptcy Code (such 60-day or other period being the "Section 1110
Period"), involuntarily stayed or prohibited by applicable law or court order
from exercising such remedies under the Lease (a "Continuous Stay Period");
provided further, however, that the requirement to exercise one or more of such
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remedies under the Lease shall nonetheless be applicable during a Continuous
Stay Period subsequent to the expiration of the Section 1110 Period to the
extent that the continuation of such Continuous Stay Period subsequent to the
expiration of the Section 1110 Period (A) results from an agreement by the
trustee or the debtor-in-possession in such proceeding during the Section 1110
Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to
perform as required by Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is
an extension of the Section 1110 Period with the consent of the Indenture
Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from
the Lessee's assumption during the Section 1110 Period with the approval of the
relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code and
Lessee's continuous performance of the Lease as so assumed or (D) is the
consequence of the Indenture Trustee's own failure to give any requisite notice
to any person. In the event that the applicability of Section 1110 of the
Bankruptcy Code to the Aircraft is being contested by Lessee in judicial
proceedings, both of the Indenture Trustee and the Owner Trustee shall have the
right to participate in such proceedings; provided that any such participation
by the Owner Trustee shall not affect in any way any rights or remedy of the
Indenture Trustee hereunder.
(b) If an Indenture Event of Default under clause (i) (attributable to an
Event of Default under Section 16(f), (g) and (h) of the Lease) (iv), (v) or
(vi) of Section 7.01 hereof shall occur and be continuing, the unpaid principal
of all Outstanding Equipment Notes, together with interest accrued but unpaid
thereon and all other amounts due thereunder, but without Make-Whole Premium,
shall immediately become due and payable, without presentment, demand, protest
or notice, all of which are hereby waived.
(c) If any Indenture Event of Default not described in the preceding
paragraph (b) shall have occurred and be continuing, then and in every such
case, the Indenture Trustee may on its own accord or at the direction of a
Majority in Interest of Holders, at any time, by written notice to the Owner
Trustee, the Owner Participant and the Lessee, declare the principal of all the
Equipment Notes to be due and payable, whereupon the unpaid principal amount of
all Outstanding Equipment Notes, together with accrued interest thereon and all
other amounts due thereunder, but without Make-Whole Premium, shall immediately
become due and payable without presentment, demand, protest or other notice, all
of which are hereby waived. At any time after such declaration and prior to the
sale or disposition of the Trust Indenture Estate, however, a Majority in
Interest of Holders, by notice to the Indenture Trustee, the Owner Trustee and
the Lessee, may rescind such declaration, whether made by the Indenture Trustee
on its own accord or as directed, if (x) there has been paid or deposited with
the Indenture Trustee a sum sufficient to pay all overdue installments of
interest on all Equipment Notes (together, to the extent permitted by law, with
interest on such overdue installments of interest), the principal on any
Equipment Notes that would have become due otherwise than by such declaration of
acceleration, all sums paid or advanced by the Indenture Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel,
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or (y) all Indenture Events of Default (other than the nonpayment of principal
that has become due solely because of such acceleration) have been either cured
or waived as provided in Section 7.11 hereof. No such rescission shall affect
any subsequent default or impair any right consequent thereon.
(d) Each Holder shall be entitled at any sale to credit against any
purchase price bid at such sale by such Holder all or any part of the unpaid
obligations owing to such Holder secured by the Lien of this Indenture (but only
to the extent that an amount equal to such purchase price would have been paid
to such Holder pursuant to Article V hereof if such purchase price were paid in
cash and the foregoing provisions of this subsection (d) were not given effect).
(e) In the event of any sale of the Trust Indenture Estate, or any part
thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the term of this Indenture, the unpaid
principal amount of all Equipment Notes then outstanding, together with accrued
interest thereon (without Make-Whole Amount), and other amounts due thereunder,
shall immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(f) Notwithstanding anything contained herein, so long as the Pass Through
Trustee under any Pass Through Trust Agreement (or its designee) is a Holder,
the Indenture Trustee will not be authorized or empowered to acquire title to
the Trust Indenture Estate or take any action with respect to the Trust
Indenture Estate so acquired by it if such acquisition or action would cause any
Trust to fail to qualify as a "grantor trust" for federal income tax purposes.
Section 7.03. Return of Aircraft, etc. (a) Subject to Section 7.02 hereof,
if an Indenture Event of Default shall have occurred and be continuing, at the
request of the Indenture Trustee, the Owner Trustee shall promptly execute and
deliver to the Indenture Trustee such documents as the Indenture Trustee may
reasonably deem necessary or advisable to enable the Indenture Trustee or an
agent or representative designated by the Indenture Trustee, at such time or
times and place or places as the Indenture Trustee may specify, to obtain
possession of all or any part of the Trust Indenture Estate to which the
Indenture Trustee shall at the time be entitled under this Indenture. Subject to
the foregoing, if the Owner Trustee shall for any reason fail to execute and
deliver such documents after such request by the Indenture Trustee, the
Indenture Trustee may pursue all or part of such Trust Indenture Estate wherever
it may be found and enter any of the premises of the Lessee or the Owner Trustee
wherever such Trust Indenture Estate may be or be supposed to be and search for
such Trust Indenture Estate and take possession of and remove such Trust
Indenture Estate. All expenses of pursuing, searching for and taking such Trust
Indenture Estate shall, until paid, be secured by the Lien of this Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may, from
time to time, at the expense of the Trust Indenture Estate, make all such
expenditures
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for maintenance, use, operation, storage, insurance, leasing, control,
management, disposition, modification, alterations and repairs to and of such
Trust Indenture Estate, as the Indenture Trustee may reasonably deem proper. In
each case subject to Section 7.02 hereof, the Indenture Trustee shall have the
right to maintain, use, operate, store, insure, lease, dispose of, modify,
alter, control or manage the Trust Indenture Estate and to carry on the business
and to exercise all rights and powers of the Owner Participant and the Owner
Trustee relating to the Trust Indenture Estate, as the Indenture Trustee may
reasonably deem best, including the right to enter into any and all such
agreements with respect to the maintenance, insurance, use, operation, storage,
leasing, control, management, modification, alteration or disposition of all or
any part of the Trust Indenture Estate as the Indenture Trustee may determine.
Further, the Indenture Trustee shall be entitled to collect and receive directly
all tolls, rents (including Rent), revenues, issues, income, products and
profits of the Trust Indenture Estate and every part thereof other than Excepted
Payments, without prejudice, however, to the right of the Indenture Trustee
under any provision of this Indenture to collect and receive all cash held by,
or required to be deposited with, the Indenture Trustee under this Indenture
(other than Excepted Payments). Such tolls, rents (including Rent), revenues,
issues, income, products and profits shall be applied to pay the expenses of the
use, operation, storage, insurance, leasing, control, management, modification,
alteration or disposition of the Trust Indenture Estate, and of all maintenance
and repairs, and of conducting the business thereof, and to make all payments
which the Indenture Trustee may be required or may reasonably elect to make for
any taxes, assessments, insurance or other proper charges upon the Trust
Indenture Estate (including the employment of engineers and accountants to
examine, inspect and make reports upon the properties and books and records of
the Owner Trustee and the Lessee), and all other payments which the Indenture
Trustee may be required or authorized to make under any provision of this
Indenture, as well as just and reasonable compensation for the services of the
Indenture Trustee and of all persons properly engaged and employed for such
purposes by the Indenture Trustee; provided, that any excess amounts shall be
promptly distributed in accordance with Section 5.03 hereof.
(c) Subject to Section 7.02 hereof, if an Indenture Event of Default shall
have occurred and be continuing and the Indenture Trustee shall be entitled to
exercise remedies hereunder, and subject to Article VIII hereof, the Indenture
Trustee, either with or without taking possession, and either before or after
taking possession, and without instituting any legal proceedings whatsoever, may
sell, assign, transfer and deliver the whole or, from time to time, to the
extent permitted by law, any part of the Trust Indenture Estate, or interest
therein, at any private sale or public auction to the highest bidder, with or
without demand, advertisement or notice, except that in respect of any private
sale 30 days' prior written notice by registered mail to the Owner Trustee and
the Owner Participant will be provided, for cash or, with the consent of the
Owner Trustee and the Owner Participant, credit or for other property, for
immediate or future delivery, and for such price or prices and on such terms as
the Indenture Trustee in exercising reasonable commercial discretion may
determine; provided, that any such action shall be at the time lawful and that
all mandatory legal
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requirements shall be complied with. Any notice required pursuant to the terms
hereof in the case of a public sale, shall state the time and place fixed for
such sale. Any such public sale shall be held at such time or times within
ordinary business hours as the Indenture Trustee shall fix in the notice of such
sale. At any such sale, the Trust Indenture Estate may be sold in one lot as an
entirety or in separate lots. The Indenture Trustee shall not be obligated to
make any sale pursuant to such notice. The Indenture Trustee may, without notice
or publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for such
sale, and any such sale may be made at any time or place to which the same may
be so adjourned without further notice or publication. The Indenture Trustee may
exercise such right of sale without possession or production of the Equipment
Notes or proof of ownership thereof, and as representative of the Holders may
exercise such right without notice to the Holders or without including the
Holders as parties to any suit or proceedings relating to the foreclosure of any
part of the Trust Indenture Estate. The Owner Trustee shall execute any and all
such bills of sale, assignments and other documents, and perform and do all
other acts and things requested by the Indenture Trustee in order to permit
consummation of any sale of the Trust Indenture Estate in accordance with this
Section 7.03(c) and to effectuate the transfer or conveyance referred to in the
first sentence of this Section 7.03(c). Notwithstanding any other provision of
this Indenture, the Indenture Trustee shall not sell the Trust Indenture Estate
or any part thereof unless the Equipment Notes shall have been accelerated.
(d) To the extent permitted by Applicable Law, and subject to Section 7.02
hereof, the Indenture Trustee or any Holder may be a purchaser of the Trust
Indenture Estate or any part thereof or any interest therein at any sale
thereof, whether pursuant to foreclosure or power of sale or otherwise. The
Indenture Trustee may apply against the purchase price therefor the amount then
due hereunder or under any of the Equipment Notes secured hereby and any Holder
may apply against the purchase price therefor the amount then due to it
hereunder, under any other Indenture Document or under the Equipment Notes held
by such Holder to the extent of such portion of the purchase price as it would
have received had it been entitled to share any distribution thereof. The
Indenture Trustee or any Holder or nominee thereof shall, upon any such
purchase, acquire good title to the property so purchased, free of the Lien of
this Indenture and, to the extent permitted by applicable law, free of all
rights of redemption in the Owner Trustee or the Owner Participant in respect of
the property so purchased.
(e) The Indenture Trustee shall, as a matter of right, be entitled to the
appointment of a receiver (who may be the Indenture Trustee or any successor or
nominee) for all or any part of the Trust Indenture Estate, whether such
receivership be incidental to a proposed sale of the Trust Indenture Estate or
the taking of possession thereof or otherwise, and the Owner Trustee hereby
consents to the appointment of such receiver and will not oppose any such
appointment. Any receiver appointed for all or any part of the Trust Indenture
Estate shall be entitled to exercise
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all of the rights and powers of the Indenture Trustee with respect to the Trust
Indenture Estate.
(f) Subject to the provisions of this Indenture, to the extent permitted
by Applicable Law, upon the occurrence and during the continuation of an
Indenture Event of Default the Owner Trustee irrevocably appoints the Indenture
Trustee the true and lawful attorney-in-fact of the Owner Trustee (which
appointment is coupled with an interest) in its name and stead and on its
behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Indenture, whether pursuant to
foreclosure or power of sale, assignments and other instruments as may be
necessary or appropriate, with full power substitution, the Owner Trustee hereby
ratifying and confirming all that such attorney or any substitute shall do by
virtue hereof in accordance with applicable law. Nevertheless, if so requested
by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and
confirm any such sale, assignment, transfer or delivery, by executing and
delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
Section 7.04. Indenture Trustee May Prove Debt. If the Owner Trustee shall
fail to pay any amount payable hereunder or under the Equipment Notes, the
Indenture Trustee, in its own name and as trustee of an express trust, shall be
entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceedings to judgment or final decree, and may enforce any such
judgment or final decree against the Owner Trustee and collect in the manner
provided by law out of the property of the Owner Trustee wherever situated, the
moneys adjudged or decreed to be payable; provided, that any sale of any portion
of the Trust Indenture Estate shall be done in accordance with Sections 7.02 and
7.03(c) hereof.
In case there shall be pending proceedings relative to the Owner Trustee
under the Bankruptcy Code or any other applicable Federal or state bankruptcy,
insolvency or other similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official shall
have been appointed for or taken possession of the Owner Trustee or its
property, or in case of any other comparable judicial proceedings relative to
the Owner Trustee, or to the creditors or property of the Owner Trustee, the
Indenture Trustee, irrespective of whether the principal of the Equipment Notes
shall then be due and payable as therein or herein expressed or by declaration
or otherwise and irrespective of whether the Indenture Trustee shall have made
any demand pursuant to the provisions of this Section, shall be entitled and
empowered, by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount
of principal, interest and other amounts owing and unpaid in respect of
the Equipment Notes or hereunder, and to file such other papers or
documents as may be necessary or advisable in order to have the claims of
the Indenture
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Trustee (including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence or bad faith) and of the Holders allowed in any judicial
proceedings relative to the Owner Trustee or to the creditors or property
of the Owner Trustee,
(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other bankruptcy or
insolvency proceedings or person performing similar functions in
comparable proceedings, and
(c) to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute all amounts
received with respect to the claims of the Holders and of the Indenture
Trustee on their behalf;
and any trustee, receiver, or liquidator, custodian or other similar official is
hereby authorized by each of the Holders to make payments to the Indenture
Trustee, and, in the event that the Indenture Trustee shall consent to the
making of payments directly to the Holders, to pay to the Indenture Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents,
attorneys and counsel, and all other expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture Trustee
except as a result of negligence or willful misconduct.
Nothing contained herein shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Equipment Notes or the rights of any Holder thereof, or to
authorize the Indenture Trustee to vote in respect of the claim of any Holder in
any such proceeding except, as aforesaid, to vote for the election of a trustee
in bankruptcy or similar person.
All rights of action and rights to assert claims under this Indenture, or
under any of the Equipment Notes, may be enforced by the Indenture Trustee
without the possession of such Equipment Notes. Any trial or other proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents and attorneys, shall
be for the ratable benefit of the Holders, as provided herein.
In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party) the Indenture Trustee shall be
held to represent all the
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Holders of the Equipment Notes, and it shall not be necessary to make any
Holders parties to such proceedings.
Section 7.05. Remedies Cumulative. Each and every right, power and remedy
given to the Indenture Trustee in this Indenture shall be cumulative and shall
be in addition to every other right, power and remedy specifically given herein
or now or hereafter existing at law, in equity or by statute, and each and every
right, power and remedy whether specifically given herein or otherwise existing
may be exercised from time to time and as often and in such order as may be
deemed expedient by the Indenture Trustee or the Holders, and the exercise or
the beginning of the exercise of any power or remedy shall not be construed to
be a waiver of the right to exercise at the same time or later any other right,
power or remedy. No delay or omission by the Indenture Trustee or of any Holder
in the exercise of any right, remedy or power or in the pursuance of any remedy
shall impair any such right, power or remedy or be construed to be a waiver of
any default on the part of the Owner Trustee or the Lessee or to be an
acquiescence in any such default.
Section 7.06. Suits for Enforcement. If an Indenture Event of Default has
occurred, has not been waived and is continuing, the Indenture Trustee may in
its discretion and subject to its rights of appropriate indemnification under
Sections 7.09 and 9.03 and Article XI hereof proceed to protect and enforce its
rights and rights of the Holders by such appropriate judicial proceedings as the
Indenture Trustee shall deem most effectual to protect and enforce any of such
rights, either at law or in equity or in bankruptcy or otherwise, whether for
the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture or to
enforce any other legal or equitable right vested in the Indenture Trustee or
the Holders by this Indenture or by law; provided that, any sale of any portion
of the Trust Indenture Estate shall be done in accordance with Sections 7.02 and
7.03(c) hereof.
Section 7.07. Discontinuance of Proceedings. In case the Indenture Trustee
or any Holder shall have instituted any proceeding to enforce any right, power
or remedy under this Indenture by foreclosure, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee or such Holder, then the
Owner Trustee, the Indenture Trustee, any Owner Participant, the Holders and the
Lessee shall, subject to any binding determination in such proceeding, be
restored to their former positions and rights under this Indenture with respect
to the Trust Indenture Estate, and all rights, remedies and powers of the
Indenture Trustee and the Holders shall continue as if no such proceeding had
been instituted.
Section 7.08. Unconditional Right of Holders to Payments on Equipment
Notes. Notwithstanding any other provision in this Indenture and any provision
of any Equipment Note, the right of any Holder to receive payment of the
principal of and interest and Make-Whole Premium, if any, on such Equipment Note
on or after the respective due dates and in the manner expressed in such
Equipment Note or to
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institute suit for the enforcement of any such payment on or after such
respective dates as provided herein, shall not be impaired or affected without
the consent of such Holder.
Section 7.09. Control by Holders. The Majority in Interest of Holders
shall have the right to direct the Indenture Trustee as to the time, method, and
place of conducting any proceeding for any remedy available to the Indenture
Trustee under this Indenture, or exercising any trust or power conferred on the
Indenture Trustee by this Indenture; provided that such direction shall not be
otherwise than in accordance with law and the provisions of this Indenture and
the Indenture Trustee shall have received, to the extent provided in Sections
7.06 and 9.03 and Article XI hereof, such reasonable indemnification as it may
require against the costs, expenses and liabilities to be incurred by the
Indenture Trustee; and provided further that (subject to the provisions of
Section 9.02 hereof) the Indenture Trustee shall have the right to decline to
follow any such direction if the Indenture Trustee, being advised by counsel,
shall determine that the action or proceeding so directed may not lawfully be
taken or if the Indenture Trustee in good faith by its board of directors, the
executive committee, or a trust committee of directors or Responsible Officers
of the Indenture Trustee shall determine that the action or proceedings so
directed would involve the Indenture Trustee in personal liability or if the
Indenture Trustee in good faith shall so determine that the actions or
forbearance specified in or pursuant to such direction shall be unduly
prejudicial to the interests of Holders not joining in the giving of said
direction, it being understood that (subject to Section 9.02 hereof) the
Indenture Trustee shall have no duty to ascertain whether or not such actions or
forbearance are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Indenture Trustee
in its discretion to take any action deemed proper by the Indenture Trustee and
which is not inconsistent with the direction by the Majority in Interest of
Holders.
Section 7.10. Waiver of Past Indenture Default. Upon written instructions
from the Majority in Interest of Holders, the Indenture Trustee shall waive any
past Indenture Default and its consequences and upon any such waiver such
Indenture Default shall cease to exist and any Indenture Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture, but no such waiver shall extend to any subsequent or other Indenture
Default or impair any right consequent thereon; provided, however, that in the
absence of written instructions from all Holders and each Liquidity Provider,
the Indenture Trustee shall not waive any Indenture Default (a) in the payment
of the principal of or Make-Whole Premium, if any, or interest on, or other
amounts due under, any Equipment Note then Outstanding, or (b) in respect of a
covenant or provision of this Indenture which, under Article XIII hereof, cannot
be modified or amended without the consent of each Holder.
Section 7.11. Notice of Indenture Default. The Indenture Trustee shall
transmit to the Owner Trustee, the Holders, the Liquidity Provider and the Owner
Participant notice of any Indenture Event of Defaults actually known to a
Responsible
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Officer of the Indenture Trustee or any Indenture Event of Default or Indenture
Default arising under Section 7.01(i) (arising out of a Lease Event of Default
under Section 16(a) of the Lease) or 7.01(ii), such notice to be transmitted by
mail to the Holders, the Liquidity Provider, the Owner Trustee and any Owner
Participant promptly after the occurrence thereof, unless any such Indenture
Default or Indenture Event of Default shall have been cured before the giving of
such notice; provided that, except in the case of default in the payment of the
principal of or interest on or any other amount due under any of the Equipment
Notes, the Indenture Trustee shall be protected in withholding such notice to
the Holders if and so long as the board of directors, the executive committee,
or a trust committee of directors or trustees and/or Responsible Officers of the
Indenture Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders. In the case of any Indenture Event of
Default relating to a Lease Event of Default, the Indenture Trustee agrees to
give the Holders, the Owner Trustee and the Owner Participant not less than ten
Business Days prior notice of the date on which the Indenture Trustee may
commence the exercise of any remedy made under Section 7.02.
ARTICLE VIII
RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT
Section 8.01. Certain Rights of Owner Trustee and Owner Participant. (a)
Except as provided in paragraph (a) immediately following the Granting Clause
hereof and in Section 13.01 hereof, without the consent of a Majority in
Interest of Holders, the respective parties to the Indenture Documents may not
modify, amend or supplement any of said agreements, or give any consent, waiver,
authorization or approval thereunder, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions thereof or of
modifying in any manner the rights of the respective parties thereunder;
provided, however, that the actions specified in subsection (b) of this Section
8.01 may be taken without the consent of the Indenture Trustee or any Holder.
(b) Subject to the provisions of subsection (c) of this Section 8.01, the
Lessor and the respective parties to the Indenture Documents, at any time and
from time to time, without the consent of the Indenture Trustee or of any
Holder, may:
(1) so long as no Indenture Event of Default shall have
occurred and be continuing, modify, amend or supplement the Lease, or give
any waiver with respect thereto, except that without compliance with
subsection (a) of this Section 8.01 the parties to the Lease shall not
modify, amend or supplement, or give any waiver for the purpose of adding
any provisions to or changing in any manner or eliminating any of the
provisions thereof or of modifying in any manner the rights of the
respective parties thereunder, with respect to the
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following provisions of the Lease as in effect on the effective date
hereof: Sections 2, 3(c) (except to the extent such Section relates to
amounts payable (whether directly or pursuant to this Indenture) to
Persons other than Holders, each Liquidity Provider, the Subordination
Agent and the Indenture Trustee in its individual capacity), 3(e) (except
insofar as it relates to the address or account information of the Owner
Trustee or the Indenture Trustee), 3(f), 3(g), 4, 6 (except in order to
increase the Lessee's liabilities or enhance the Lessor's rights
thereunder), 8 (except that additional requirements may be imposed on the
Lessee), 9 (except for Section 9(f) and except that additional insurance
requirements may be imposed on the Lessee), 10, 11(b) (except to impose
additional requirements on the Lessee) 14(a) (except that further
restrictions may be imposed on the Lessee), 16 (except to impose
additional or more stringent Events of Default), 17 (except to impose
additional remedies), 20(b) and 23(e) and any definition of terms used in
the Lease, to the extent that any modification of such definition would
result in a modification of the Lease not permitted pursuant to this
subsection (b); provided that the parties to the Lease may take any such
action without the consent of the Indenture Trustee or any Holder to the
extent such action relates to the payment of amounts constituting, or the
Owner Trustee's, the Owner Participant's or the Lessee's rights or
obligations with respect to, Excepted Payments;
(2) modify, amend or supplement the Trust Agreement and any
other Indenture Document (other than the Lease and the Participation
Agreement), or give any consent, waiver, authorization or approval with
respect thereto, in each case only to the extent any such action shall not
materially adversely impact the interests of the Holders;
(3) modify, amend or supplement the Participation Agreement,
or give any consent, waiver, authorization or approval with respect
thereto, except that without compliance with subsection (a) of this
Section 8.01 the parties to the Participation Agreement shall not modify,
amend or supplement, or give any consent, waiver, authorization or
approval for the purpose of adding provisions to or changing in any manner
or eliminating any of the provisions thereof or of modifying in any manner
the rights of the respective parties thereunder, with respect to the
following provisions of the Participation Agreement as in effect on the
effective date hereof: Article 4 and Section 8.01(b) (insofar as such
Article 4 and Section 8.01(b) relate to the Indenture Trustee, the
Pass-Through Trustee and the Holders), Article 5 and Sections 13.01, 15.08
and Articles 6 and 7 (insofar as such Articles relate to the Indenture
Trustee; it being understood that only the Indenture Trustee's consent in
respect thereof need be obtained) and any definition of terms used in the
Participation Agreement, to the extent that any modification of such
definition would result in a modification of the Participation Agreement
not permitted pursuant to this subsection (b); and
(4) modify, amend or supplement any of the Indenture Documents
in order to cure any ambiguity, to correct or supplement any
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provisions thereof which may be defective or inconsistent with any other
provision thereof or of any provision of this Indenture, or to make any
other provision with respect to matters or questions arising thereunder or
under this Indenture which shall not be inconsistent with the provisions
of this Indenture, provided the making of any such other provision shall
not adversely affect the interests of the Holders.
(c) No modification, amendment, supplement, consent, waiver, authorization
or approval with respect to the Lease or the Participation Agreement, whether
effected pursuant to subsection (a) or pursuant to subsection (b) of this
Section 8.01 and anything in such subsections or elsewhere in this Indenture to
the contrary notwithstanding, shall, without the consent of the Holder of each
Outstanding Equipment Note affected thereby, and each Liquidity Provider,
(1) modify, amend or supplement the Lease in such a way as to
extend the time of payment of Basic Rent or Termination Value or
Supplemental Rent payable to the Holders or any Liquidity Provider or any
other amounts payable for the account of the Holders or any Liquidity
Provider (subject in any event to Section 3(e) of the Lease) upon the
occurrence of an Event of Loss or Termination Value and any other amounts
payable for the account of the Holders (subject in any event to Section
3(e) of the Lease) upon termination of the Lease with respect to the
Aircraft payable under, or as provided in, the Lease as in effect on the
effective date hereof, or reduce the amount of any installment of Basic
Rent or Supplemental Rent so that the same is less than the payment of
principal of, and interest on the Equipment Notes and Make-Whole Premium,
if any, and amounts due to each Liquidity Provider, as the case may be, to
be made from such installment of Basic Rent or Supplemental Rent, or
reduce the aggregate amount of Termination Value, or any other amounts
payable under, or as provided in, the Lease as in effect on the date of
the Indenture Supplement, upon the occurrence of an Event of Loss so that
the same is, as of the applicable Loss Payment Date, less than the accrued
interest on and the principal of the Equipment Notes at the time
Outstanding or reduce the aggregate amount of Termination Value and any
other amounts payable under, or as provided in, the Lease as in effect on
the date of the Indenture Supplement, upon termination of the Lease with
respect to the Aircraft so that the same is, as of the applicable
Termination Date, less than the accrued interest on, principal of and
Make-Whole Premium, if any, of Equipment Notes at the time Outstanding, or
(2) modify, amend or supplement the Lease in such a way as to,
or consent to any assignment of the Lease or give any consent, waiver,
authorization or approval which would, release the Lessee from its
absolute and unconditional obligations in respect of payment of Basic Rent
or Supplemental Rent, or Termination Value and any other amounts payable
for the account of the Holders (subject in any event to Section 3(e) of
the Lease) upon the occurrence of an Event of Loss, or Termination Value
and any other amounts payable for the account of the Holders (subject in
any event to Section 3(e) of the
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Lease) with respect to the Aircraft, payable under, or as provided in, the
Lease as in effect on the date of the Indenture Supplement, except for any
such assignment pursuant to Section 2.11 hereof, and except as provided in
the Lease as in effect on the date of the Indenture Supplement.
(d) At all times so long as this Indenture is in effect and
notwithstanding that an Indenture Event of Default has occurred and is
continuing, the consent of the Owner Trustee (at the direction of the Owner
Participant) shall be required in order (i) to amend, modify or supplement the
Lease or any other Operative Document to which the Owner Trustee is a party or
to waive compliance by the Lessee with any of its obligations thereunder and
(ii) to grant any consent requested under the Lease.
Notwithstanding the foregoing, but subject always to the provision of Section
15.05 hereof, the Indenture Trustee shall at all times have the right, to the
exclusion of the Owner Trustee and the Owner Participant, to (A) declare the
Lease to be in default under Section 17 (other than with respect to Excepted
Payments) thereof and (B) subject only to the provisions of this Indenture,
exercise the remedies set forth in Section 17 of the Lease (other than in
connection with Excepted Payments).
Nothing in this Indenture shall be deemed to prohibit the Owner
Participant or the Owner Trustee from making demand on the Lessee for, or from
commencing an action at law to obtain the payment of, or from receiving payment
of, any Excepted Payment; provided, however, that if the Owner Trustee is
proceeding under the Lease, the Owner Trustee shall proceed pursuant to Section
17(e), and only Section 17(e), of the Lease.
Section 8.02. Owner Participant's Right to Prepay or Purchase the
Equipment Notes. (a) If (i) an Event of Default shall have occurred and be
continuing, (ii) the Indenture Trustee shall have taken action, or notified the
Owner Trustee or Owner Participant that it intends to take action, to foreclose
the Lien of this Indenture or otherwise commence the exercise of any significant
remedy under Section 7.02 of this Indenture or Section 17 of the Lease or (iii)
the Equipment Notes shall have become due and payable pursuant to Section
7.02(b) or (c) hereof, the Owner Participant (or the Owner Trustee on behalf of
the Owner Participant) may, but shall be under no obligation to do either of the
following:
(1) direct the Owner Trustee to cause the prepayment of all, but not less
than all, of the Equipment Notes then Outstanding by notifying the Indenture
Trustee of such election, which notice in order to be effective shall state that
it is irrevocable and shall designate a Prepayment Date which shall be a
Business Day which shall be not less than 15 days after the date of such notice
on which the Owner Trustee shall, in the manner provided for in Section 6.04
hereof, deposit the sum of amounts contemplated by paragraph "first" under
Section 5.03 and the aggregate Prepayment Price (determined in accordance with
Section 6.02(b) hereof) of all such Equipment Notes with the Indenture Trustee.
If such payment by the Owner Trustee to the Indenture Trustee is made, the
Equipment Notes shall cease to accrue interest from and after the
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Prepayment Date, and after distribution of such payment to the Holders, the
Indenture Trustee shall release the Trust Indenture Estate from the Lien of this
Indenture; or
(2) purchase all, but not less than all, of the Outstanding Equipment
Notes by notifying the Indenture Trustee of such election, which notice in order
to be effective shall state that it is irrevocable and shall designate a date
which shall be a Business Day which shall be not less than 15 days after the
date of such notice on which the Owner Trustee shall pay to the Indenture
Trustee an amount equal to the aggregate unpaid principal amount of all
Outstanding Equipment Notes, together with accrued interest on such amount to
the date of purchase, plus all other sums due any Holder or the Indenture
Trustee hereunder or under the Participation Agreement or the Lease, but without
any Make-Whole Premium (provided that the Make-Whole Premium shall be included
if the purchase is made pursuant to clause (a)(i) above (but not pursuant to
clause (a)(ii) or (a)(iii) above) when the Event of Default shall have occurred
and been continuing for less than 180 days). Upon receipt by the Indenture
Trustee of such amount, each Holder will be deemed, whether or not Equipment
Notes shall have been delivered to the Indenture Trustee on such date, to have
thereupon sold, assigned, transferred and conveyed (and shall promptly take such
actions as the Owner Participant shall reasonably request to evidence such sale,
assignment, transfer and conveyance) to the Owner Participant (without recourse
or warranty of any kind except for its own acts), all of the right, title and
interest of such Holder in and to the Trust Indenture Estate and this Indenture
and all Equipment Notes held by such Holder and the former Holders shall not be
entitled to receive any interest on the principal amount of such Equipment Notes
after the purchase date, and the Owner Participant shall be deemed to have
assumed (and shall promptly take such actions as any Holder shall reasonably
request to evidence such assumption) all of such Holder's obligations under the
Participation Agreement and this Indenture arising subsequent to such sale. If
the Owner Trustee shall so request, such Holder will comply with all the
provisions of Section 2.06 of this Indenture to enable new Equipment Notes to be
issued to the Owner Participant in such authorized denominations as the Owner
Participant shall request. All charges and expenses required pursuant to Section
2.06 hereof in connection with the issuance of any such new Equipment Notes
shall be borne by the Owner Participant.
(b) From and after the deposit by the Owner Trustee of the applicable
Prepayment Price or purchase price with the Indenture Trustee pursuant to
Section 8.02(a) hereof, the Owner Trustee shall be entitled to exercise all
remedies of the Indenture Trustee under Article VII hereof as well as of the
Lessor under the Lease.
Section 8.03. Certain Rights of Owner Participant. (a) If (A) there shall
occur an Event of Default under the Lease as a result of the Lessee's failure to
make any payment of an installment of Basic Rent, and (B) the Owner Trustee
shall have paid or caused to be paid on or prior to the date which is 15
Business Days after the Owner Participant's receipt of written notice of such
Event of Default all principal and interest on the Equipment Notes then due (as
well as any interest on overdue principal and (to the extent permitted by
applicable law) interest), but not including any
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principal or interest becoming due on account of such Event of Default, then the
failure of the Lessee to make the payment of such installment of Basic Rent or
of interest on account of such installment's being overdue shall not constitute
or result in an Indenture Event of Default under this Indenture and any
declaration based solely on the same shall be deemed to be automatically
rescinded. Nothing contained in the preceding sentence shall be deemed to
entitle the Owner Trustee to exercise any rights and powers or pursue any
remedies pursuant to Section 17 of the Lease or otherwise except as set forth in
this Indenture, and except that the Owner Trustee or the Owner Participant may
attempt to recover any amount paid by it or them under this Indenture by
demanding of the Lessee payment of such amount pursuant to Section 17(e), but
only said Section 17(e), of the Lease. Upon curing any such Event of Default
pursuant to this Section 8.03, the Owner Trustee or the Owner Participant, as
the case may be, shall be subrogated on an unsecured basis to all the rights of
the Indenture Trustee under the Lease in respect of the payment giving rise to
such Event of Default, and any right to any interest in respect of the same, and
shall be entitled to any payment of Basic Rent (or interest thereon) actually
made by the Lessee in respect of such cured payment upon receipt by the
Indenture Trustee; provided that no such amount shall be paid to the Owner
Trustee or the Owner Participant until all amounts then due and payable to each
Holder hereunder and thereunder shall have been paid in full and no Indenture
Event of Default shall have occurred and be continuing and the Owner Trustee
will not be entitled to recover any such payments, except pursuant to the
foregoing right of subrogation, by demand or suit for damages. Notwithstanding
anything in this Indenture or the Lease to the contrary, the Owner Participant
and the Owner Trustee collectively, shall not be entitled to cure more than six
Events of Default (no more than three of which may be consecutive) occasioned by
defaults in the payment of Basic Rent.
(b) If (A) there shall occur an Event of Default under the Lease for any
reason other than the Lessee's failure to make any payment of an installment of
Basic Rent and (B) the Owner Trustee shall have taken or caused to be taken such
action necessary to cure and shall have cured such Event of Default prior to the
date which is 15 Business Days after the Owner Participant's receipt of the
written notice of such Event of Default, then the failure of the Lessee to
perform such covenant, condition or agreement, the observance or performance of
which was accomplished by the Owner Trustee hereunder shall not constitute or
result in an Indenture Event of Default under this Indenture and any declaration
based solely on the same shall be deemed to be automatically rescinded. Nothing
contained in the preceding sentence shall be deemed to entitle the Owner Trustee
or the Owner Participant to exercise any rights and powers or pursue any
remedies pursuant to Section 17 of the Lease or otherwise except as set forth in
this Indenture, and except that the Owner Trustee or the Owner Participant may
attempt to recover any amount paid by it or them in effecting such cure by
demanding of the Lessee payment of such amount, plus any interest due, or by
commencing an action at law or in equity against the Lessee for the payment of
such amount pursuant to Section 17(e), but only Section 17(e), of the Lease.
Upon curing any such Event of Default pursuant to this Section 8.03(b), the
Owner Trustee or the Owner Participant, as the case may be, shall be subrogated
to all the rights of the
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Indenture Trustee under the Lease in respect of the payment, agreement or
covenant giving rise to such Event of Default, and any right to any interest in
respect of the same, and shall be entitled to any payment or other performance
upon receipt by the Indenture Trustee; provided that no such amount shall be
paid to the Owner Trustee or the Owner Participant until all amounts then due
and payable to each Holder hereunder and thereunder shall have been paid in full
and no Indenture Event of Default shall have occurred and be continuing.
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
Section 9.01. Acceptance of Trusts. The Indenture Trustee in its
individual capacity hereby accepts the trusts imposed upon it by this Indenture,
and covenants and agrees to perform the same as expressed herein and agrees to
receive and disburse all moneys constituting part of the Trust Indenture Estate
in accordance with the terms hereof.
Section 9.02. Duties Before, and During, Existence of Indenture Event of
Default. (a) The Indenture Trustee, prior to the occurrence of an Indenture
Event of Default and after the curing or waiving of all Indenture Events of
Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. So long as an Indenture
Event of Default has occurred and has not been cured or waived, the Indenture
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs. No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own negligent
failure to act (or any simple negligence in the handling of funds) or its own
willful misconduct, except that:
(i) prior to the occurrence of an Indenture Event of Default and after the
curing or waiving of all Indenture Events of Default which may have occurred:
(x) the duties and obligations of the Indenture Trustee shall
be determined solely by the express provisions of this Indenture, and the
Indenture Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read in to this Indenture
against the Indenture Trustee; and
(y) in the absence of bad faith on the part of the Indenture
Trustee, the Indenture Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
any statements, certificates or opinions furnished to the Indenture
Trustee and
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conforming to the requirements of this Indenture; but in the case of any
such statements, certificate or opinions which by any provision hereof are
specifically required to be furnished to the Indenture Trustee, the
Indenture Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Indenture;
(ii) the Indenture Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers of the
Indenture Trustee, unless it shall be proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to any action
taken or not taken by it in good faith in accordance with the direction of the
Holders of not less than a majority in aggregate principal amount of Outstanding
Equipment Notes relating to the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustee, or exercising any
trust or power conferred upon the Indenture Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Indenture Trustee shall have determined
in good faith that the repayment of such funds or adequate indemnity against
such liability is not reasonably assured to it.
The Indenture Trustee agrees that it will execute and the Owner Trustee
agrees that it will, at the expense of the Lessee, file or cause to be filed
such continuation statements with respect to financing statements relating to
the security interest created hereunder in the Trust Indenture Estate as may be
specified from time to time in written instructions of the Holders of not less
than 25% in aggregate principal amount of Equipment Notes (which instructions
may, by their terms, be operative only at a future date and which shall be
accompanied by the execution form of such continuation statement so to be
filed); provided that, notwithstanding the foregoing, the Indenture Trustee may
execute and file or cause to be filed any financing statement which it from time
to time deems appropriate.
(b) [Reserved].
(c) The Indenture Trustee agrees that it will, in its individual capacity
and at its own cost and expense (but without any right of indemnity in respect
of any such cost or expense under Article XI hereof or under any other Operative
Agreement) promptly take such action as may be necessary duly to discharge all
Indenture Trustee's Liens on any part of the Trust Indenture Estate.
(d) [Reserved]
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(e) The Indenture Trustee will furnish to each Holder promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and other instruments furnished to
the Indenture Trustee, to the extent that the same shall not have been otherwise
furnished to such Holder pursuant to this Indenture or to the extent the
Indenture Trustee does not reasonably believe that the same shall have been
furnished by the Lessee directly to such Holder.
Section 9.03. Certain Rights of the Indenture Trustee. Subject to Section
9.02 hereof:
(a) the Indenture Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, note, coupon, security or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request, direction, order or demand of the Owner Trustee mentioned
herein shall be sufficiently evidenced by an Officer's Certificate (unless other
evidence in respect thereof be herein specifically prescribed) upon which the
Indenture Trustee may rely to prove or establish a matter set forth therein;
(c) the Indenture Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(d) the Indenture Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Indenture Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred therein or thereby;
(e) the Indenture Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Indenture Event of Default hereunder and
after the curing or waiving of all Indenture Events of Default, the Indenture
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, appraisal, bond, debenture, note,
coupon, security, or other paper or document unless requested in writing to do
so by the Majority in Interest of Holders; provided that, if the payment within
a reasonable time to the Indenture Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Indenture, the
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Indenture Trustee may require reasonable indemnity against such costs, expenses
or liabilities as a condition to proceeding; the reasonable expenses of every
such examination shall be paid by the Owner Trustee or, if paid by the Indenture
Trustee or any predecessor trustee, shall be repaid by the Owner Trustee upon
demand; and
(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys not regularly in its employ and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care by it hereunder.
Section 9.04. Indenture Trustee Not Responsible for Recitals, Equipment
Notes, or Proceeds. The Indenture Trustee assumes no responsibility for the
correctness of the recitals contained herein and in the Equipment Notes, except
the Indenture Trustee's certificates of authentication. The Indenture Trustee
makes no representation as to the validity or sufficiency of this Indenture or
of the Equipment Notes. The Indenture Trustee shall not be accountable for the
use or application by the Owner Trustee of any of the Equipment Notes or of the
proceeds thereof.
Section 9.05. Indenture Trustee and Agents May Hold Equipment Notes;
Collections, etc. The Indenture Trustee or any agent of the Indenture Trustee in
its individual or any other capacity may become the owner or pledgee of
Equipment Notes with the same rights it would have if it were not the Indenture
Trustee or such agent and may otherwise deal with the Owner Trustee and receive,
collect, hold and retain collections from the Owner Trustee with the same rights
it would have if it were not the Indenture Trustee or such agent.
Section 9.06. Moneys Held by Indenture Trustee. Subject to Sections 5.08
hereof and 14.04 hereof, all moneys received by the Indenture Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated from other funds except to
the extent required by mandatory provisions of law. Neither the Owner Trustee
nor, subject to Section 5.08 hereof, the Indenture Trustee nor any agent thereof
shall be under any liability for interest on any moneys received by it
hereunder.
Section 9.07. Right of Indenture Trustee to Rely on Officer's Certificate,
etc. Subject to Sections 9.02 and 9.03 hereof, whenever in the administration of
the trusts of this Indenture the Indenture Trustee shall deem it necessary or
desirable that a matter be proved or established prior to taking or suffering or
omitting any action hereunder, such matter (unless other evidence in respect
thereof be specifically prescribed herein) may, in the absence of bad faith on
the part of the Indenture Trustee, be deemed to be conclusively proved and
established by an Officer's Equipment Note delivered to the Indenture Trustee,
and such certificate, in the absence of bad faith on the part of the Indenture
Trustee, shall be full warrant to the Indenture Trustee for any action taken,
suffered or omitted by it under the provisions of this Indenture upon the faith
thereof.
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Section 9.08. Replacement Airframes and Replacement Engines. At any time
and from time to time any Airframe or Engine may, or is required to, be replaced
under Section 8(a) or 7(e) of the Lease by a Replacement Airframe or Replacement
Engine, as the case may be, shall be replaced in accordance with the provisions
of this Section 9.08 and the provisions of such Sections of the Lease, the Owner
Trustee shall, from time to time, direct the Indenture Trustee to execute and
deliver to or as directed in writing by the Owner Trustee an appropriate
instrument releasing such Airframe and/or Engine as appropriate from the Lien of
this Indenture and the Indenture Trustee shall execute and deliver such
instrument as aforesaid without recourse or warranty, but only upon receipt by
or deposit with the Indenture Trustee of the following:
(1) A written request from the Owner Trustee requesting such release and
specifically describing the Airframe and/or Engine(s) to be so released.
(2) A certificate signed by a duly authorized officer of the Lessee
stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe subject to the Event of Loss
including the manufacturer, model, FAA registration number (or other
applicable registration information) and manufacturer's serial number;
(ii) a description of the Replacement Airframe, including the
manufacturer, model, FAA registration number (or other applicable
registration information) and manufacturer's serial number;
(iii) that on the date of the supplement to this Indenture
relating to the Replacement Airframe the Owner Trustee will be the legal
owner of and have good title to such Replacement Airframe free and clear
of all Liens except Permitted Liens that such Replacement Airframe will on
such date be in at least as good operating condition and repair as
required by the terms of the Lease, and that such Replacement Airframe has
been or, substantially concurrently with such replacement, will be duly
registered in the name of the Owner Trustee under the Transportation Code
or under the law then applicable to the registration of the Airframe
subject to the Event of Loss and that an airworthiness certificate has
been duly issued under the Aviation Act (or such other applicable law)
with respect to such Replacement Airframe and that such registration and
certificate is, or will be, in full force and effect, and that the Lessee
will have the full right and authority to use such Replacement Airframe;
(iv) that the insurance required by Section 9 of the Lease is
in full force and effect with respect to such Replacement Airframe;
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(v) that the Replacement Airframe is of the same or an
improved make or model as the Airframe requested to be released from this
Indenture;
(vi) that the value of the Replacement Airframe as of the date
of such certificate is not less than the value of the Airframe requested
to be released (assuming such Airframe was in the condition and repair
required to be maintained under the Lease);
(vii) that no Event of Default exists or would result from the
making and granting of the request for release and the addition of a
Replacement Airframe;
(viii) that the release of the Airframe subject to the Event
of Loss will not impair the security of the Indenture in contravention of
any of the provisions of this Indenture;
(ix) that upon such replacement, the Lien of this Indenture
will apply to the Replacement Airframe and such Lien will be a first
priority security interest in favor of the Indenture Trustee; and
(x) that each of the conditions specified in Section 8(d) of
the Lease with respect to such Replacement Airframe has been satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine subject to the Event of Loss
including the manufacturer's serial number;
(ii) a description of the Replacement Engine including the
manufacturer's name, the engine model and serial number;
(iii) that on the date of the supplement to this Indenture
relating to the Replacement Engine the Owner Trustee will be the legal
owner of such Replacement Engine free and clear of all Liens except
Permitted Liens, and that such Replacement Engine will on such date be in
at least as good operating condition and repair as required by the terms
of the Lease and will otherwise conform to the requirements set forth in
the definition of "Replacement Engine";
(iv) that the value of the Replacement Engine as of the date
of such certificate is not less than the value of the Engine to be
released (without regard to the number of hours or cycles remaining until
the next scheduled maintenance visit, and assuming such Engine was in the
condition and repair required to be maintained under the Lease);
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(v) that the release of the Engine subject to the Event of
Loss will not impair the security of the Indenture in contravention of any
of the provisions of this Indenture;
(vi) that upon such replacement, the Lien of this Indenture
will apply to the Replacement Engine and such Lien will be a first
priority security interest in favor of the Indenture Trustee; and
(vii) that each of the conditions specified in Section 7(e) of
the Lease with respect to such Replacement Engine has been satisfied.
(3) The appropriate instruments (i) transferring to the Owner Trustee
title to the Replacement Airframe or Replacement Engine to be received as
consideration for the Airframe or Engine to be released and (ii) assigning to
the Owner Trustee the benefit of all manufacturer's and vendor's warranties, if
any, generally available with respect to such Replacement Airframe or
Replacement Engine, and a supplement to this Indenture subjecting such
Replacement Airframe or Replacement Engine to the Trust Agreement and to the
Lien of this Indenture.
(4) A certificate from a firm of independent aircraft appraisers of
national standing reasonably satisfactory to the Indenture Trustee and the Owner
Trustee confirming the accuracy of the information set forth in clause (2)A(vi)
of this Section 9.08.
(5) The opinions of counsel to the Lessee (which may be Lessee's General
Counsel), or (with respect to those matters set forth in clause (ii) below
relating to the filing of documents pursuant to the Transportation Code) of the
Lessee's special aviation counsel, or (in either case) other counsel reasonably
satisfactory to the Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property which have been or are therewith delivered to and deposited with
the Indenture Trustee conform to the requirements of this Indenture and
the Lease and, upon the basis of such application, the property so sold or
disposed of may be properly released from the Lien of this Indenture and
all conditions precedent herein provided for relating to such release have
been complied with; and
(ii) the Replacement Airframe or Replacement Engine has been
validly subjected to the Lien of this Indenture and covered by the Lease,
the instruments subjecting such Replacement Airframe or Replacement Engine
to the Lease and to the Lien of this Indenture, as the case may be, have
been duly filed for recordation pursuant to the Transportation Code or any
other law then applicable to the registration of the Aircraft, and no
further action, filing or recording of any document is necessary or
advisable in order to establish and perfect the title of the Owner Trustee
to and the Lien of this Indenture on such Replacement Airframe or
Replacement Engine and, with respect to a
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Replacement Airframe, the Indenture Trustee would be entitled to the
benefits of Section 1110 of the Bankruptcy Code with respect to such
Replacement Airframe, provided, that such opinion need not be to the
effect specified in the foregoing clause to the extent that the benefits
of such Section 1110 would not have been, by reason of a change in law or
governmental interpretation thereof after the date hereof, available to
the Indenture Trustee with respect to the Aircraft immediately prior to
such substitution had such Event of Loss not occurred.
Section 9.09. Indenture Supplement for Replacements. In the event of the
substitution of a Replacement Airframe or a Replacement Engine as contemplated
by Section 8(a) or 7(e) of the Lease, as the case may be, the Owner Trustee and
the Indenture Trustee agree for the benefit of the Holders and the Lessee,
subject to fulfillment of the conditions precedent and compliance by the Lessee
with its obligations set forth in Section 8(a) or 7(e) of the Lease, as the case
may be, to execute and deliver a supplement to this Indenture as contemplated by
Section 9.08(3) hereof and, provided no Event of Default shall have occurred and
be continuing, execute and deliver to the Lessee an appropriate instrument
releasing the Airframe or Engine being replaced from the Lien of this Indenture.
Section 9.10. Effect of Replacement. In the event of the substitution of a
Replacement Airframe or a Replacement Engine as contemplated by Section 8(a) or
7(e) of the Lease, as the case may be, and Section 9.08 hereof, all provisions
of this Indenture relating to the Airframe or Engine or Engines being replaced
shall be applicable to such Replacement Airframe or Replacement Engine or
Engines with the same force and effect as if such Replacement Airframe or
Replacement Engine or Engines were the same Airframe or engine or engines, as
the case may be, as the Airframe or Engine or Engines being replaced but for any
Event of Loss with respect to the Airframe or Engine or Engines being replaced.
Section 9.11. Compensation. The Owner Trustee covenants and agrees to pay,
and the Indenture Trustee shall be entitled to receive, reasonable compensation
and payment or reimbursement for its reasonable advances, expenses and
disbursements (including the reasonable compensation and expenses and
disbursements of its counsel, agents and other persons not regularly in its
employ) in connection with its services rendered hereunder or in any way
relating to or arising out of the administration of the Trust Indenture Estate
and shall have a priority claim on the Trust Indenture Estate for the payment of
such compensation, advances, expenses and disbursements to the extent that such
compensation, advances, expenses and disbursements shall not be paid by the
Lessee, and shall have the right to use or apply any moneys held by it hereunder
in the Trust Indenture Estate toward such payments; provided that, so long as
the Lease is in effect, the Indenture Trustee shall not make any claim for
payment under this Section 9.11 against the Owner Trustee without first making
demand on the Lessee for payment of such claim. The Indenture Trustee agrees
that it shall have no right against any Holder, Trust Company, or the Owner
Participant for any fee as compensation for its services as trustee under this
Indenture.
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ARTICLE X
CONCERNING THE HOLDERS
Section 10.01. Evidence of Action Taken by Holders. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by an agent duly appointed in writing, and, except
as otherwise expressly provided herein, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee and, if
expressly required herein, to the Owner Trustee. Proof of execution of any
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Sections 9.02 and 9.03 hereof)
conclusive in favor of the Indenture Trustee and the Owner Trustee, if made in
the manner provided in this Article.
(b) For the purpose of determining the Holders entitled to vote or consent
to any direction, waiver or other action of such Holders under Section 7.10 or
7.11 hereof, the Lessee may set a record date for such vote or consent by
specifying such record date in an Officer's Certificate delivered to the
Indenture Trustee. Such record date shall be a date not more than 15 days prior
to the first solicitation of such vote or consent.
Section 10.02. Proof of Execution of Instruments and of Holding of
Equipment Notes. Subject to Sections 9.02 and 9.03 hereof, the execution of any
instrument by a Holder or his agent or proxy may be proved in accordance with
such reasonable rules and regulations as may be prescribed by the Indenture
Trustee. The holding of Equipment Notes shall be proved by the Register or by a
certificate of the Registrar.
Section 10.03. Holders to Be Treated as Owners. Prior to due presentment
for registration of transfer of any Equipment Note, the Owner Trustee, the
Indenture Trustee, any agent of the Owner Trustee or the Indenture Trustee, the
Paying Agent, if any, the Registrar and the Lessee shall deem and treat the
Person in whose name such Equipment shall be registered upon the Register as the
absolute owner of such Equipment Note (whether or not such Equipment Note shall
be overdue and notwithstanding any notation of ownership or other writing
thereon) for the purpose of receiving payment of or on account of the principal
of and, subject to the provisions of this Indenture, interest on such Equipment
Note and for all other purposes; and neither the Owner Trustee nor the Indenture
Trustee (nor any agent of the Owner Trustee or the Indenture Trustee) nor the
Paying Agent, if any, nor the Registrar nor the Lessee shall be affected by any
notice to the contrary. All such payments so made to any such person, or upon
his order, shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Equipment Note.
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Section 10.04. Equipment Notes Owned by Owner Trustee or Lessee Deemed Not
Outstanding. In determining whether the Holders of the requisite aggregate
principal amount of Equipment Notes have concurred in any direction, consent or
waiver under this Indenture, Equipment Notes which are owned by the Owner
Trustee, any Owner Participant, the Lessee or any Affiliate thereof shall be
disregarded and deemed not to be Outstanding for the purpose of any such
determination; provided that for the purpose of determining whether the
Indenture Trustee shall be protected in relying on any such direction, consent
or waiver, only if a Responsible Officer of the Indenture Trustee has actual
knowledge that certain Equipment Notes are so owned by any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Owner Trustee, such Owner Participant, Trust Company or the
Lessee shall such Equipment Notes be so disregarded; and provided further that
if all Equipment Notes which would be deemed Outstanding in the absence of the
foregoing provision are owned by the Owner Trustee, Trust Company or any Owner
Participant or by any Affiliate thereof, then such Equipment Notes shall be
deemed Outstanding for the purpose of any such determination. Equipment Notes so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Indenture Trustee the
pledgee's right so to act with respect to such Equipment Notes and that the
pledgee is not the Owner Trustee, the Owner Participant, Trust Company or the
Lessee or any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Owner Trustee, the Owner
Participant, Trust Company or the Lessee. In case of a dispute as to such right,
the advice of counsel shall be full protection in respect of any decision made
by the Indenture Trustee in accordance with such advice, unless the Lessee, the
Owner Trustee, Trust Company, or the Owner Participant are actually named in the
Register. Upon request of the Indenture Trustee, the Owner Trustee, the Owner
Participant, Trust Company and the Lessee shall furnish to the Indenture Trustee
promptly an Officer's Certificate listing and identifying all Equipment Notes,
if any, known by the Owner Trustee, the Owner Participant, Trust Company or the
Lessee to be owned or held by or for the account of any of the above-described
persons; and, subject to Sections 9.02 and 9.03 hereof, the Indenture Trustee
shall be entitled to accept such Officer's Certificate as conclusive evidence of
the facts set forth therein and of the fact that all Equipment Notes not listed
therein are outstanding for the purpose of any such determination.
Section 10.05. ERISA. Any Person, other than the Subordination Agent and
any Pass-Through Trustee, who is acquiring the Equipment Notes will be deemed to
represent and warrant that (i) no assets of an employee benefit plan subject to
Title I of ERISA or an individual retirement account or plan subject to Section
4975 of the Code, or any trust established under any such plan or account, have
been used to acquire or hold any of the Equipment Notes, or (ii) that one or
more administrative or statutory exemptions from the prohibited transaction
rules under Section 406 of ERISA and Section 4975 of the Code applies to its
purchase and holding of the Equipment Notes such that its purchase and holding
of the Equipment Notes will not result in a non-exempt prohibited transaction
under Section 406 of ERISA and Section 4975 of the Code.
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ARTICLE XI
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
The Owner Trustee, not individually but solely in its capacity as Owner
Trustee, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated, to assume liability for, and does hereby indemnify,
protect, save and keep harmless the Indenture Trustee, in its individual
capacity, and its successors, assigns, agents and servants solely from the
Lessor's Estate, with respect to the claims of the Indenture Trustee for payment
or reimbursement under Section 9.11 hereof and from and against any and all
liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes
payable by the Indenture Trustee on or measured by any compensation received by
the Indenture Trustee for its services under this Indenture and any taxes
excluded from the Lessee's indemnity obligation under Section 6.01(b) of the
Participation Agreement), claims, actions, suits, costs, expenses or
disbursements (including legal fees and expenses) of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the
Indenture Trustee (whether or not also agreed to be indemnified against by any
other person under any other document) in any way relating to or arising out of
this Indenture, or any other Indenture Documents or the enforcement of any of
the terms of any thereof, or in any way relating to or arising out of the
manufacture, purchase, acceptance, nonacceptance, rejection, ownership,
delivery, lease, possession, use, operation, condition, sale, return or other
disposition of the Aircraft or any Engine (including, without limitation, latent
and other defects, whether or not discoverable, and any claim for patent,
trademark or copyright infringement), or in any way relating to or arising out
of the administration of the Trust Indenture Estate or the action or inaction of
the Indenture Trustee hereunder, except only (a) in the case of willful
misconduct or gross negligence of the Indenture Trustee in the performance of
its duties hereunder, (b) as may result from the inaccuracy of any
representation or warranty of the Indenture Trustee in the Participation
Agreement, (c) as otherwise provided in Section 9.02(c) hereof or (d) as
otherwise excluded by the terms of Article 6 or Article 7 of the Participation
Agreement from the Lessee's general indemnity or general tax indemnity to the
Indenture Trustee under said Article; provided that so long as the Lease is in
effect, the Indenture Trustee shall not make any claim under this Article XI for
any claim or expense indemnified by the Lessee under the Participation Agreement
without first making demand on the Lessee for payment of such claim or expense.
The Indenture Trustee shall be entitled to indemnification, from the Trust
Indenture Estate, for any liability, obligation, loss, damage, penalty, claim,
action, suit, cost, expense or disbursement indemnified against pursuant to this
Article XI to the extent not reimbursed by the Lessee or others, but without
releasing any of them from their respective agreements of reimbursement; and to
secure the same the Indenture Trustee shall have a prior Lien on the Trust
Indenture Estate. The indemnities contained in this Article XI shall survive the
termination of this Indenture and the resignation or removal of the Indenture
Trustee. Upon payment in full by the Owner Trustee of any indemnity pursuant to
this Article XI, the Owner Trustee shall, so long as no Indenture Event of
Default shall have
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occurred and be continuing, be subrogated to the rights of the Indenture
Trustee, if any, in respect of the matter as to which the indemnity was paid.
ARTICLE XII
SUCCESSOR TRUSTEES
Section 12.01. Notice of Successor Owner Trustee. In the case of any
appointment of a successor to the Owner Trustee pursuant to the Trust Agreement
or any merger, conversion, consolidation or sale of substantially all of the
corporate trust business of the Owner Trustee pursuant to the Trust Agreement,
the successor Owner Trustee shall give prompt written notice thereof to the
Indenture Trustee.
Section 12.02. Resignation and Removal of Indenture Trustee: Appointment
of Successor. (a) The Indenture Trustee or any successor thereto may resign at
any time without cause by giving at least 30 days' prior written notice to the
Owner Trustee, the Owner Participant, the Lessee and each Holder, such
resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee. In addition, the Lessee, the Majority in Interest
of the Holders or the Owner Trustee (with the consent of the Lessee and the
Majority in Interest of the Holders) may at any time remove the Indenture
Trustee without cause by an instrument in writing delivered to the Lessee, the
Owner Trustee, the Owner Participant, and the Indenture Trustee, and the
Indenture Trustee shall promptly notify each Holder thereof of such action in
writing, such removal to be effective upon the acceptance of the trusteeship by
a successor Indenture Trustee. In the case of the resignation or removal of the
Indenture Trustee, the Majority in Interest of the Holders (based on the
recommendation of the Lessee) or the Owner Trustee (with the consent of the
Lessee and the Majority in Interest of the Holders), may appoint a successor
Indenture Trustee by an instrument signed by such Holders. If a successor
Indenture Trustee shall not have been appointed within 30 days after such notice
of resignation or removal, the Indenture Trustee, the Owner Trustee, the Lessee,
the Owner Participant, or any Holder may apply to any court of competent
jurisdiction to appoint a successor Indenture Trustee to act until such time, if
any, as a successor shall have been appointed as provided above. The successor
Indenture Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Indenture Trustee appointed as
provided above.
(b) In case at any time any of the following shall occur:
(i) the Indenture Trustee shall cease to be eligible in
accordance with the provisions of Section 12.03 hereof and shall fail to
resign after written request therefor by the Owner Trustee or by any
Holder; or
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(ii) the Indenture Trustee shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator
of the Indenture Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Indenture Trustee or of
its property or affairs for the purpose of rehabilitation, conservation or
liquidation;
then the Owner Trustee may remove the Indenture Trustee and, with the consent of
the Lessee, appoint a successor trustee by written instrument, in duplicate,
executed by a Responsible Officer of the Owner Trustee, one copy of which
instrument shall be delivered to the Indenture Trustee so removed and one copy
to the successor trustee, or, subject to the provisions of Section 7.13 hereof,
any Holder who has been a bona fide Holder for at least six months may, on
behalf of himself and all others similarly situated Holders, petition any court
of competent jurisdiction for the removal of the Indenture Trustee and the
appointment of a successor trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, remove the Indenture Trustee and
appoint a successor trustee, which removal and appointment shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 12.04 hereof. The successor Indenture Trustee so appointed by such court
shall immediately and without further act be superseded by any successor
Indenture Trustee appointed as provided above within one year from the date of
appointment by such court.
Section 12.03. Persons Eligible for Appointment as Indenture Trustee.
There shall at all times be an Indenture Trustee hereunder which shall be (i)(x)
a bank or trust company organized and doing business under the laws of the
United States of America or any state or the District of Columbia having a
combined capital and surplus of at least $75,000,000 or (y) a bank or trust
company whose obligations hereunder are fully guaranteed by a direct or indirect
parent thereof having a combined capital and surplus of at least $75,000,000 and
(ii) a Person authorized under applicable law to exercise corporate trust powers
and subject to supervision of examination by Federal, state or District of
Columbia authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Indenture Trustee shall cease to be eligible in accordance
with the provisions of this Section, the Indenture Trustee shall resign
immediately in the manner and with the effect specified in Section 12.02 hereof.
Section 12.04. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 12.02 hereof shall execute
and deliver to the Owner Trustee, the Lessee, and to its predecessor trustee an
instrument accepting such appointment hereunder, in form and substance
reasonably satisfactory to the Owner Trustee, and thereupon the resignation or
removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all rights, powers, duties and obligations of its
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predecessor hereunder, with like effect as if originally named as trustee
herein; but, nevertheless, on the written request of the Owner Trustee or of the
successor trustee, upon payment of its charges then unpaid, the trustee ceasing
to act shall, subject to Section 14.04 hereof, pay over to the successor trustee
all moneys at the time held by it hereunder and shall execute and deliver an
instrument transferring to such successor trustee all such rights, powers,
duties and obligations. Upon request of any such successor trustee, the Owner
Trustee shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor trustee all such rights
and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Article XI hereof.
No successor trustee shall accept appointment as provided in this Section
12.04 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 12.03 hereof.
Upon acceptance of appointment by a successor trustee as provided in this
Section 12.04, the successor trustee shall mail notice thereof by first-class
mail to the Holders at their last addresses as they shall appear in the
Register, and shall mail a copy of such notice to the Lessee and the Owner
Trustee. If the acceptance of appointment is substantially contemporaneous with
the resignation, then the notice called for by the preceding sentence may be
combined with the notice called for by Section 12.02 hereof.
Section 12.05. Merger, Consolidation or Succession to Business of
Indenture Trustee. Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation succeeding to the corporate trust
business of the Indenture Trustee, shall be the successor to the Indenture
Trustee hereunder, provided that, anything herein to the contrary
notwithstanding, such corporation shall be eligible under the provisions of
Section 12.03 hereof, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
In case at the time such successor to the Indenture Trustee shall succeed
to the trusts created by this Indenture any of the Equipment Notes shall have
been authenticated but not delivered, any such successor to the Indenture
Trustee may adopt the certificate of authentication of any predecessor Indenture
Trustee and deliver such Equipment Notes so authenticated; and, in case at that
time any of the Equipment Notes shall not have been authenticated, any successor
to the Indenture Trustee may authenticate such Equipment Notes either in the
name of any predecessor hereunder or in the name of the successor Indenture
Trustee; and in all such cases such certificate shall have the full force which
it is anywhere in the Equipment Notes or in this Indenture provided that the
certificate of the Indenture Trustee shall have; provided, that the right to
adopt the certificate of authentication of any predecessor Indenture Trustee or
to authenticate Equipment Notes in the name of any predecessor Indenture
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Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.
Section 12.06. Appointment of Separate Trustees. (a) At any time or times,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Indenture Estate may at the time be located or in which
any action of the Indenture Trustee may be required to be performed or taken,
the Indenture Trustee, by an instrument in writing signed by it, may appoint one
or more individuals or corporations to act as a separate trustee or separate
trustees or co-trustee, acting jointly with the Indenture Trustee, of all or any
part of the Trust Indenture Estate, to the full extent that local law makes it
necessary for such separate trustee or separate trustees or co-trustee acting
jointly with the Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture Trustee,
the Owner Trustee, shall execute, acknowledge and deliver all such instruments
as may be required by the legal requirements of any jurisdiction or by any such
separate trustee or separate trustees or co-trustee for the purpose of more
fully confirming such title, rights or duties to such separate trustee or
separate trustees or co-trustee. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee, it,
he or they shall be vested with such title to the Trust Indenture Estate or any
part thereof, and with such rights, powers, duties and obligations, as shall be
specified in the instrument of appointment, and such rights, powers, duties and
obligations shall be conferred or imposed upon and exercised or performed by the
Indenture Trustee, or the Indenture Trustee and such separate trustee or
separate trustees or co-trustee jointly with the Indenture Trustee subject to
all the terms of this Indenture, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the
Indenture Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations shall be
exercised and performed by such separate trustee or separate trustees or
co-trustee, as the case may be. Any separate trustee or separate trustees or
co-trustee may, at any time by an instrument in writing, constitute the
Indenture Trustee its or his attorney-in-fact and agent with full power and
authority to do all acts and things and to exercise all discretion on its or his
behalf and in its or his name. In case any such separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, the title to the
Trust Indenture Estate and all assets, property, rights, powers, duties and
obligations and duties of such separate trustee or co-trustee shall, so far as
permitted by law, vest in and be exercised by the Indenture Trustee, without the
appointment of a successor to such separate trustee or co-trustee unless and
until a successor is appointed.
(c) All provisions of this Indenture which are for the benefit of the
Indenture Trustee (including without limitation Article XI hereof) shall extend
to and apply to each separate trustee or co-trustee appointed pursuant to the
foregoing provisions of this Section 12.06.
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(d) Every additional trustee and separate trustee hereunder shall, to the
extent permitted by law, be appointed and act and the Indenture Trustee shall
act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon
the Indenture Trustee in respect of the receipt, custody, investment and
payment of moneys shall be exercised solely by the Indenture Trustee;
(ii) all other rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be conferred or
imposed and exercised or performed by the Indenture Trustee and such
additional trustee or trustees and separate trustee or trustees jointly
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed, the Indenture Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust Indenture Estate in any such jurisdiction) shall be
exercised and performed by such additional trustee or trustees or separate
trustee or trustees;
(iii) no power hereby given to, or exercisable by, any such
additional trustee or separate trustee shall be exercised hereunder by
such additional trustee or separate trustee except jointly with, or with
the consent of, the Indenture Trustee; and
(iv) no trustee hereunder shall be liable either personally or
in its capacity as such trustee, by reason of any act or omission of any
other trustee hereunder.
If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the Indenture Trustee
to any additional trustee or separate trustee shall be sufficient warrant to
such additional trustee or separate trustee, as the case may be, to take such
action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 12.06, the powers
of any additional trustee or separate trustee shall not exceed those of the
Indenture Trustee hereunder.
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ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
Section 13.01. Supplemental Indentures Without Consent of Holders. The
Owner Trustee (when authorized by the Owner Participant) and the Indenture
Trustee, without consent of the Holders, may enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge any property or assets
to the Indenture Trustee as security for the Equipment Notes;
(b) to evidence the succession of another corporation to the Owner Trustee
or successive successions, and the assumption by the successor corporation of
the covenants, agreements and obligations of the Owner Trustee herein and in the
Equipment Notes;
(c) to add to the covenants of the Owner Trustee such further covenants,
restrictions, conditions or provisions as it and the Indenture Trustee shall
consider to be for the protection of the Holders, and to make the occurrence, or
the occurrence and continuance, of a default in any such additional covenants,
restrictions, conditions or provisions an Indenture Event of Default permitting
the enforcement of all or any of the several remedies provided herein; provided,
that in respect of any such additional covenant, restriction, condition or
provision such supplemental indenture may provide for a particular period of
grace after default (which period may be shorter or longer than that allowed in
the case of other defaults) or may provide for an immediate enforcement upon
such an Indenture Event of Default or may limit the remedies available to the
Indenture Trustee upon such an Indenture Event of Default or may limit the right
of not less than the Majority in Interest of Holders to waive such an Indenture
Event of Default;
(d) to surrender any right or power conferred herein upon the Owner
Trustee or the Owner Participant;
(e) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture; or to make such other provisions in regard to matters or questions
arising under this Indenture or under any supplemental indenture as the Owner
Trustee may deem necessary or desirable and which shall not adversely affect the
interests of the Holders;
(f) to correct or amplify the description of any property at any time
subject to the Lien of this Indenture or better to assure, convey and confirm
unto the Indenture Trustee any property subject or required to be subject to the
Lien of this Indenture or to subject any Replacement Airframe or Replacement
Engine to the Lien
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of this Indenture in accordance with the provisions hereof or with the Lease or
to release from the Lien of this Indenture property that has been substituted on
or removed from the Aircraft as contemplated in Section 3.07 hereof; provided
that supplements to this Indenture entered into for the purpose of subjecting
any Replacement Airframe or Replacement Engine to the Lien of this Indenture
need only be executed by the Owner Trustee and the Indenture Trustee;
(g) to provide for the issuance under this Indenture of Equipment Notes in
coupon form (including Equipment Notes registrable as to principal only) and to
provide for exchangeability of such Equipment Notes with Equipment Notes issued
hereunder in fully registered form, and to make all appropriate changes for such
purpose;
(h) to effect the re-registration of the Aircraft pursuant to Section
4.02(b) of the Participation Agreement; and
(i) to add, eliminate or change any provision hereunder so long as such
action shall not adversely affect the interests of the Holders.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture, to make any further appropriate agreements and
stipulations which may be contained therein and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Indenture Trustee shall not be obligated to enter into any such supplemental
indenture which adversely affects the Indenture Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any such supplemental indenture may be executed without the consent of the
Holders notwithstanding any of the provisions of Section 13.02 hereof.
Section 13.02. Supplemental Indentures With Consent of Holders. With the
consent (evidenced as provided in Article X) of the Majority in Interest of
Holders, the Owner Trustee (when authorized by the Owner Participant) and the
Indenture Trustee may, from time to time and at any time, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture or of modifying in any manner
the rights of the Holders; provided, however, that, without the consent of each
and every Holder and each Liquidity Provider, no such amendment of or supplement
to this Indenture or any indenture supplemental hereto, or modification of the
terms of, or consent under, any thereof, shall (a) modify any of the provisions
of Section 7.11 hereof or this Section 13.02, (b) reduce the amount or extend
the time of payment of any amount owing or payable under any Equipment Note or
reduce the interest payable on any Equipment Note, or alter or modify the
provisions of Article V hereof with respect to the order of priorities in which
distributions thereunder shall be made as among Holders of different Series of
Equipment Notes or as between the Holder and the Owner Trustee or the Owner
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Participant or with respect to the amount or time of payment of any such
distribution, or alter or modify the circumstances under which a Make-Whole
Premium shall be payable, or alter the currency in which any amount payable
under any Equipment Note is to be paid, or impair the right of any Holder to
commence legal proceedings to enforce a right to receive payment hereunder or
(c) create or permit the creation of any Lien on the Trust Indenture Estate or
any part thereof prior to or pari passu with the Lien of this Indenture, except
as expressly permitted herein, or deprive any Holder of the benefit of the Lien
of this Indenture on the Trust Indenture Estate, except as provided in Section
7.02 hereof or in connection with the exercise of remedies under Article VII.
This Section 13.02 shall not apply to any indenture or indentures supplemental
hereto permitted by, and complying with the terms of, Section 13.06 hereof.
Upon the request of the Owner Trustee (at the direction of the Owner
Participant) and upon the filing with the Indenture Trustee of evidence of the
consent of Holders and other documents, if any, required by Section 10.01, the
Indenture Trustee shall join with the Owner Trustee and the Lessee in the
execution of such supplemental indenture unless such supplemental indenture
affects the Indenture Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Indenture Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section 13.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Promptly after the execution by the Owner Trustee, the Indenture Trustee
and the Lessee of any supplemental indenture pursuant to the provisions of this
Section, the Indenture Trustee shall mail a notice thereof by first-class mail
to the Holders at their addresses as they shall appear on the registry books of
the Registrar, setting forth in general terms the substance of such supplemental
indenture. Any failure of the Indenture Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
Section 13.03. Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith and the
respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Indenture Trustee, the Owner Trustee, the Lessee and
the Holders shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
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Section 13.04. Documents to Be Given to Indenture Trustee. The Indenture
Trustee, subject to the provisions of Sections 9.02 and 9.03, may receive an
Officer's Certificate and an Opinion of Counsel as conclusive evidence that any
such supplemental indenture complies with the applicable provisions of this
Indenture.
Section 13.05. Notation on Equipment Notes in Respect of Supplemental
Indentures. Equipment Notes authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article may bear a
notation in form approved by the Indenture Trustee as to any matter provided for
by such supplemental indenture. If the Owner Trustee or the Indenture Trustee
shall so determine, new Equipment Notes so modified as to conform, in the
opinion of the Owner Trustee and the Indenture Trustee, to any modification of
this Indenture contained in any such supplemental indenture may be prepared by
the Owner Trustee, authenticated by the Indenture Trustee and delivered in
exchange for the Outstanding Equipment Notes.
Section 13.06. No Request Necessary for Lease Supplement or Indenture
Supplement. Notwithstanding anything contained in Section 13.02 hereof, no
written request or consent of the Indenture Trustee, any Holder or the Owner
Participant pursuant to Section 13.02 hereof shall be required to enable the
Owner Trustee to enter into any supplement to the Lease with the Lessee in
accordance with the terms and conditions of the Lease to subject a Replacement
Airframe or Replacement Engine thereto or to execute and deliver any supplement
to the Indenture (including the Indenture Supplement) pursuant to the terms
hereof.
Section 13.07. Notices to Liquidity Providers. Any request made to any
Holder for consent to any amendment, supplement or waiver pursuant to Section
7.11, 8.01 or this Article XIII shall be promptly furnished by the Indenture
Trustee to each Liquidity Provider.
ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 14.01. Satisfaction and Discharge of Indenture: Termination of
Indenture. If at any time after (a) the Owner Trustee shall have paid or caused
to be paid the principal of and interest on all the Equipment Notes outstanding
hereunder, as and when the same shall have become due and payable and provided
that there shall be no Secured Obligations due to the Indenture Indemnitees, or
(b) the Owner Trustee shall have delivered to the Indenture Trustee for
cancellation all Equipment Notes theretofore authenticated (other than any
Equipment Notes which shall have been destroyed, lost or stolen and which shall
have been replaced or paid as provided in Section 2.07 hereof), then this
Indenture shall cease to be of further effect, and the Indenture Trustee, on
demand of the Owner Trustee and at the cost and expense of the
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Owner Trustee, shall execute proper instruments acknowledging such satisfaction
of and discharging this Indenture. The Owner Trustee agrees to reimburse and
indemnify the Indenture Trustee for any costs or expenses thereafter reasonably
and properly incurred and to compensate the Indenture Trustee for any services
thereafter reasonably and properly rendered by the Indenture Trustee in
connection with this Indenture or the Equipment Notes.
Upon (or at any time after) payment in full to the Indenture Trustee, as
trust funds, of the principal of and interest on and Make-Whole Premium, if any,
and all other amounts due hereunder and under all Equipment Notes and of any
Secured Obligations owed to the Indenture Indemnitees, and provided that there
shall then be no other amounts due to the Indenture Trustee hereunder or under
the Participation Agreement or otherwise secured hereby, the Owner Trustee shall
direct the Indenture Trustee to execute and deliver to or as directed in writing
by the Owner Trustee an appropriate instrument releasing the Aircraft from the
Lien of this Indenture and releasing the Indenture Documents from the assignment
thereof hereunder, and the Indenture Trustee shall execute and deliver such
instrument as aforesaid and, at the Owner Trustee's expense, will execute and
deliver such other instruments or documents as may be reasonably requested by
the Owner Trustee to give effect to such release; provided, however, that this
Indenture and the trusts created hereby shall terminate earlier and this
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Indenture Trustee of all property forming a part of the Trust
Indenture Estate and the final distribution by the Indenture Trustee of all
moneys or other property or proceeds constituting part of the Trust Indenture
Estate in accordance with the terms hereof. Except as aforesaid otherwise
provided, this Indenture and the trusts created hereby shall continue in full
force and effect in accordance with the terms hereof.
Section 14.02. Application by Indenture Trustee of Funds Deposited for
Payment of Equipment Notes. Subject to Section 14.04 hereof, all moneys
deposited with the Indenture Trustee pursuant to Section 14.01 hereof shall be
held in trust and applied by it to the prompt payment, either directly or
through any Paying Agent, to the Holders of the particular Equipment Notes for
the payment or prepayment of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal,
interest and Make-Whole Premium, if any, but such money need not be segregated
from other funds except to the extent required by law.
Section 14.03. Repayment of Moneys Held by Paying Agent. Upon the
satisfaction and discharge of this Indenture all moneys then held by any Paying
Agent under the provisions of this Indenture shall, upon demand of the Owner
Trustee, be repaid to it or paid to the Indenture Trustee and thereupon such
Paying Agent shall be released from all further liability with respect to such
moneys.
Section 14.04. Transfer of Unclaimed Money Held by Indenture Trustee and
Paying Agent. Any moneys deposited with or paid to the Indenture Trustee or any
Paying Agent for the payment of the principal of or interest or Make-Whole
Premium
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on any Equipment Note and not applied but remaining unclaimed for two years and
eleven months after the date upon which such principal, interest or Make-Whole
Premium shall have become due and payable, shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be paid to the Owner Trustee (or, if the Trust Agreement shall no longer be
in effect, to the Owner Participant) by the Indenture Trustee or such Paying
Agent and the Holder of such Certificate, as a general unsecured creditor,
shall, unless otherwise required by mandatory provisions of applicable escheat
or abandoned or unclaimed property laws, thereafter look only to the Owner
Trustee (or the Owner Participant) for any payment which such Holder may be
entitled to collect, and all liability of the Indenture Trustee, or any Paying
Agent with respect to such moneys shall thereupon cease.
ARTICLE XV
MISCELLANEOUS
Section 15.01. Capacity in Which Acting. Each of Trust Company (or its
permitted successors or assigns) and FNBM acts hereunder not in its individual
capacity but solely as trustee except as expressly provided herein and in the
other Operative Agreements, and, in the case of Trust Company (or its permitted
successors or assigns), in the Trust Agreement.
Section 15.02. No Legal Title to Trust Indenture Estate in Holders. No
Holder shall have legal title to any part of the Trust Indenture Estate. No
transfer, by operation of law or otherwise, of any Equipment Note or other
right, title and interest of any Holder in and to the Trust Indenture Estate or
hereunder shall operate to terminate this Indenture or entitle such Holder or
any successor or transferee of such Holder to an accounting or to the transfer
to it of legal title to any part of the Trust Indenture Estate.
Section 15.03. Sale of Trust Indenture Estate by Indenture Trustee is
Binding. Any sale or other conveyance of all or any part of the Trust Indenture
Estate by the Indenture Trustee made pursuant to the terms of this Indenture or
of the Lease shall bind the Lessee, the Owner Trustee, the Holders and the Owner
Participant and shall be effective to transfer or convey all right, title and
interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and
such Holders therein and thereto. No purchaser or other grantee shall be
required to inquire as to the authorization, necessity, expediency or regularity
of such sale or conveyance or as to the application of any sale or other
proceeds with respect thereto by the Indenture Trustee.
Section 15.04. Indenture Benefits Trustees, Participants, Lessee, and
Liquidity Providers Only. Nothing in this Indenture, whether express or implied,
shall be construed to give to any person other than Trust Company, the Owner
Trustee, the
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Lessee, FNBM, the Indenture Trustee, the Owner Participant, each Liquidity
Provider and the Holders any legal or equitable right, remedy or claim under or
in respect of this Indenture. Upon termination of this Indenture pursuant to
Article XIV hereof, the Indenture Trustee in connection with the satisfaction of
the Indenture shall return to the Owner Trustee all property (and related
documents and instruments) constituting or evidencing the Trust Indenture
Estate.
Section 15.05. No Action Contrary to Lessee's Rights Under the Lease.
Notwithstanding any of the provisions of this Indenture or the Trust Agreement
to the contrary, so long as no Event of Default shall have occurred and be
continuing, neither the Indenture Trustee nor the Owner Trustee will take any
action that interfere with the peaceful and quiet possession and enjoyment of
the Aircraft by the Lessee or any Permitted Sublessee.
Section 15.06. Notices. Unless otherwise expressly specified or permitted
by the terms hereof, all notices, requests, demands, authorizations, directions,
consents, waivers or documents provided or permitted by this Indenture to be
made, given, furnished or filed shall be in writing, and shall be given and
become effective in the manner set forth in Section 12.01 of the Participation
Agreement. Any party hereto may change the address to which notices to such
party will be sent by giving notice of such change to the other parties to this
Indenture.
Section 15.07. Officer's Certificates and Opinions of Counsel. Upon any
application or demand by the Lessee or the Owner Trustee to the Indenture
Trustee to take any action under any of the provisions of this Indenture, the
Lessee or the Owner Trustee, as the case may be, shall furnish to the Indenture
Trustee upon request (a) an Officer's Certificate stating that all conditions
precedent provided for in this Indenture relating to the proposed action have
been complied with and that the proposed action is in conformity with the
requirements of this Indenture, and (b) an Opinion of Counsel stating that in
the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or demand as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or demand, no
additional certificate or opinion need be furnished.
Any certificate, statement or opinion of an officer of Trust Company may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of or representations by counsel, unless such officer knows that the certificate
or opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it relates
to factual matters information with respect to which is in the possession of the
Lessee or Trust Company, upon the certificate, statement or opinion of or
representations by an officer or officers of the Lessee or Trust Company, as the
case may be, unless such counsel knows that the certificate, statement or
opinion or representations with respect to the matters upon which his
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certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Lessee or Trust
Company or of counsel thereto may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an accountant or
firm of accountants employed by the Lessee or the Owner Trustee, as the case may
be, unless such officer or counsel, as the case may be, knows that the
certificate or opinion or representations with respect to the accounting matters
upon which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous.
Any certificate or opinion of any independent firm of public accountants
filed with the Indenture Trustee shall contain a statement that such firm is
independent.
Section 15.08. Severability. Any provision of this Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 15.09. No Oral Modifications or Continuing Waivers. No terms or
provisions of this Indenture or the Equipment Notes may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party or other person against whom enforcement of the change, waiver,
discharge or termination is sought; and any waiver of the terms hereof or of any
Equipment Note shall be effective only in the specific instance and for the
specific purpose given.
Section 15.10. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
parties hereto and the successors and permitted assigns of each, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument or
action by any Holder shall bind the successors and assigns of such Holder. This
Indenture and the Trust Indenture Estate shall not be affected by any amendment
or supplement to the Trust Agreement or by any other action taken under or in
respect of the Trust Agreement, except that each reference in this Indenture to
the Trust Agreement shall mean the Trust Agreement as amended and supplemented
from time to time to the extent permitted hereby and thereby.
Section 15.11. Headings. The headings of the various Articles and Sections
herein and in the table of contents hereto are for the convenience of reference
only and shall not define or limit any of the terms or provisions hereof.
Section 15.12. Normal Commercial Relations. Anything contained in this
Indenture to the contrary notwithstanding, the Owner Participant, the Indenture
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Trustee and any Holder, or any bank or other affiliate of any such party, may
conduct any banking or other financial transactions, and have banking or other
commercial relationships, with the Lessee fully to the same extent as if this
Indenture were not in effect, including without limitation the making of loans
or other extensions of credit to the Lessee for any purpose whatsoever, whether
related to any of the transactions contemplated hereby or otherwise.
Section 15.13. Governing Law; Counterparts. THIS INDENTURE IS DELIVERED IN
THE STATE OF NEW YORK. THIS INDENTURE AND EACH EQUIPMENT NOTE SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
This Indenture may be executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same instrument.
Section 15.14. Lessee's Right of Quiet Enjoyment. Notwithstanding any of
the provisions of this Indenture to the contrary, so long as no Event of Default
has occurred and is continuing unremedied, the Indenture Trustee will comply
with Section 4(b) of the Lease to the same extent as if it were the Lessor under
the Lease. Each Holder, by its acceptance thereof, consents in all respects to
the terms of the Lease and agrees to the provisions of this Section 15.14. The
Indenture Trustee acknowledges that any right it may have to possess, use,
operate, store, lease, control, manage, sell, dispose of or otherwise deal with
the Aircraft or any other property in which Lessee has any interest pursuant to
the Lease is derivative of the rights of the Owner Trustee under the Lease and
subject to the agreement of the Owner Trustee under Section 4(b) of the Lease as
referred to in the second preceding sentence herein.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture and
Security Agreement to be executed by their respective officers thereunto duly
authorized as of the date first written above.
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION,
not in its individual capacity, except as
specifically set forth herein but solely as
Owner Trustee
By: ___________________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF MARYLAND, as
Indenture Trustee
By: ___________________________________________
Name:
Title:
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Annex A
Series Principal Amount Interest Rate
------ ---------------- -------------
A
B
C
D
Annex B
Amortization Schedule
Payment Series A Series B Series C Series D
Date Equipment Equipment Equipment Equipment
-------- Notes Notes Notes Notes
----- ----- ----- -----
[Leased Aircraft
Definitions]
APPENDIX A
DEFINITIONS [N______]
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (as defined below), unless otherwise
defined in an Operative Agreement or the context thereof shall otherwise
require. In the case of any conflict between the provisions of this Appendix and
the provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean such agreements as amended and supplemented from time to
time, and (ii) references to parties to agreements shall be deemed to include
the successors and permitted assigns of such parties.
"Additional Insureds" means the Owner Trustee (in its individual and trust
capacities), the Owner Participant, the Indenture Trustee (in its individual and
trust capacities) and each Liquidity Provider.
"Aeronautics Authority" means as of any time of determination, the FAA or
other governmental airworthiness authority having jurisdiction over the Aircraft
or the Airframe and Engines or engines attached thereto under the laws of the
country in which the Airframe is then registered.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling 50% or more of any class of voting securities of such
Person or otherwise controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract or
otherwise.
"After Tax Basis" means a basis such that any payment to be received by a
Person shall be supplemented by a further payment to such Person so that the sum
of the two payments, after deduction of all Taxes (taking into account any
related credits or deductions) resulting from the receipt or accrual of such
payments, shall be equal to the payment to be received.
"Aircraft" means the Airframe together with the Engines, whether or not
any of the Engines may at the time of determination be installed on the Airframe
or installed on any other airframe or on any other aircraft.
"Airframe" means (i) the Canadair Regional Jet Series 200ER aircraft
(excluding the Engines and any other engines which may from time to time be
installed thereon, but including any and all Parts which may from time to time
be incorporated in, installed on or attached to such aircraft, and including any
and all such Parts removed therefrom so long as title to such removed Parts
remains vested in the Lessor under the terms of Section 7 of the Lease)
originally delivered and leased under the Lease, identified by national
registration number and manufacturer's serial number in the Lease Supplement
executed and delivered on the Delivery Date, so long as a Replacement Airframe
shall not have been substituted therefor pursuant to Section 8 of the Lease, and
(ii) a Replacement Airframe, so long as another Replacement Airframe shall not
have been substituted therefor pursuant to Section 8 of the Lease.
"Applicable Law" means all applicable laws, treaties, judgments, decrees,
injunctions, writs and orders of any court, governmental agency or authority and
rules, regulations, orders, directives, licenses and permits of any governmental
body, instrumentality, agency or authority.
"Average Life Date" means, for any Equipment Note, the date which follows
the prepayment date by a period equal to the Remaining Weighted Average Life of
such Equipment Note.
"Bankruptcy Code" means Title 11 of the United States Code, as amended,
and any successor thereto.
"Basic Rent" means the rent payable on Basic Rent Payment Dates throughout
the Basic Term for the Aircraft pursuant to Section 3(b) of the Lease and rent
payable during any Renewal Term pursuant to Section 13(a) of the Lease.
"Basic Rent Payment Date" means each date listed under the heading "Basic
Rent Payment Date" in Exhibit C to the Lease.
"Basic Term" means the period commencing at the beginning of the day on
the Delivery Date and ending at end of the day on the Expiration Date, or such
earlier date on which the Lease shall be terminated as provided therein.
"Beneficial Interest" means the interest of the Owner Participant under
the Trust Agreement.
"Business Day" means any day other than a Saturday or Sunday on which
commercial banks are not authorized or required to close in New York City,
Charlotte, North Carolina and the city in the United States in which the office
or agency is
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maintained by the Pass-Through Trustee for the payment of the Pass-Through
Certificates, and after the Lien of the Indenture is discharged, Wilmington,
Delaware.
"Change in Tax Law" means any change or proposed change in the Code or the
Regulations or any change in the interpretation of the Code or Regulations or
any change in the interpretation of the Code or Regulations in a decision by the
United States Supreme Court, the United States Tax Court, the United States
Court of Claims or any one of the United States Courts of Appeals, or any
issuance of a revenue ruling, revenue procedure or any pronouncement by the
Internal Revenue Service or the Department of the Treasury.
"Citizen of the United States" means a citizen of the United States as
defined in ss. 40102(a)(15) of the Transportation Code, or any analogous part of
any successor or substituted legislation or regulation at the time in effect.
"Class A Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class B Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class C Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any similar legislation of the United States enacted to supersede,
amend, or supplement such Code (and any reference to a provision of the Code
shall refer to any successor provision(s), however designated).
"Commitment" of a Loan Participant shall have the meaning given such term
in Section 2(d) of the Participation Agreement; "Commitment" of the Owner
Participant shall have the meaning given such term in Section 2(c) of the
Participation Agreement.
"CRAF Program" has the meaning specified in Section 5(b)(vii) of the
Lease.
"DOT" means the U.S. Department of Transportation or any successor
thereto.
"Debt Rate" means the weighted average (based on Outstanding principal
amount) rate of interest on the Equipment Notes.
"Default" means any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
"Delivery Date" means the date on which the Aircraft is delivered and sold
to the Lessor and leased by the Lessor to the Lessee under the Lease, which date
shall be the date of the initial Lease Supplement.
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"Deposit Agreement" means each of the four Deposit Agreements between the
Depositary and the Escrow Agent, dated as of the Issuance Date, each of which
relates to one of the Pass-Through Trusts.
"Depositary" means First Union National Bank, as Depositary under each
Deposit Agreement.
"Dollars" means dollars in lawful currency of the United States.
"Downgrade Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"EBO Date" has the meaning given to such term in Exhibit B to the Lease.
"EBO Price" has the meaning given to such term in Exhibit B to the Lease.
"Engine" means (A) one of the two CF34-3B1 Series 200 engines originally
delivered and leased under the Lease, identified by manufacturer's serial number
in the Lease Supplement executed and delivered on the Delivery Date, so long as
a Replacement Engine shall not have been substituted therefor pursuant to
Section 7(e) of the Lease, and (B) a Replacement Engine, so long as another
Replacement Engine shall not have been substituted therefor pursuant to Section
7(e) of the Lease, whether or not such engine or Replacement Engine, as the case
may be, is from time to time installed on the Airframe or installed on any other
aircraft, and including in each case all Parts incorporated or installed in or
attached thereto and any and all Parts removed therefrom so long as title to
such Parts remains vested in the Lessor under the terms of Section 7 of the
Lease. The term "Engines" means, as of any date of determination, the two
engines each of which is an Engine on that date.
"Engine Manufacturer's Consent" means any consent to the Engine Warranty
Assignment delivered by the manufacturer of the Engines on the Delivery Date and
pertaining to the Aircraft.
"Engine Warranty Assignment" means any engine warranty assignment
agreement, in form and substance reasonably acceptable to the Owner Participant
entered into by the Lessor and the Lessee on the Delivery Date.
"Equipment Notes" means the Equipment Notes issued by the Owner Trustee
pursuant to the Indenture and any equipment note issued in exchange therefor or
replacement thereof pursuant to the Indenture.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means First Union Trust Company, National Association, as
Escrow Agent under each of the Escrow Agreements.
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"Escrow Agreement" means each of the four Escrow and Paying Agent
Agreements, among the Escrow Agent, the Paying Agent, certain initial purchasers
of the Pass-Through Certificates named therein and one of the Pass-Through
Trustees, dated as of the Issuance Date, each of which relates to one of the
Pass Through Trusts.
"Event of Default" has the meaning given to such term in Section 17 of the
Lease.
"Event of Loss" means any of the following events with respect to the
Aircraft, the Airframe or any Engine:
(i) theft or disappearance for a period in excess of 90 consecutive
days;
(ii) destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use for any reason whatsoever;
(iii) any event which results in an insurance settlement with
respect to such property on the basis of an actual, constructive or
compromised total loss;
(iv) condemnation, confiscation or seizure of, or requisition of
title to or use of such property by any foreign government (or in the case
of any such requisition of title, by the Government) or any agency or
instrumentality thereof, for a period in excess of 180 consecutive days
(or 30 consecutive days for the appropriation of title), or, in any of the
cases in this clause (iv), such shorter period ending on the expiration of
the Term;
(v) condemnation, confiscation or seizure of, or requisition of use
of such property by the Government for a period extending beyond the Term,
provided that no Event of Loss shall be deemed to have occurred, and the
term of the Lease shall be extended automatically for a period of six
months in the event that the Aircraft is requisitioned by the Government
pursuant to an activation under the CRAF Program; and
(vi) as a result of any law, rule, regulation, order or other action
by the Aeronautics Authority, the use of the Aircraft or Airframe in the
normal course of air transportation shall have been prohibited by virtue
of a condition affecting all Canadair Regional Jet Series 200ER aircraft
equipped with engines of the same make and model as the Engines for a
period of 180 consecutive days (or beyond the end of the Term), unless the
Lessee, prior to the expiration of such 180-day period, shall be
diligently carrying forward all necessary and desirable steps to permit
normal use of the Aircraft and shall within 12 months have conformed at
least one Canadair Regional Jet Series 200ER aircraft (but not necessarily
the Aircraft) to the requirements of any such law, rule, regulation, order
or action, and shall be diligently pursuing conformance of the Aircraft in
a non-discriminatory manner.
-5-
The date of such Event of Loss shall be (aa) the 91st day following loss of such
property or its use due to theft or disappearance (or the end of the Term if
earlier); (bb) the date of any destruction, damage beyond economic repair or
rendition of such property permanently unfit for normal use; (cc) the date of
any insurance settlement on the basis of an actual, constructive or compromised
total loss; (dd) the 181st day following condemnation, confiscation, seizure or
requisition of title to or use of such property by a foreign government referred
to in clause (iv) above (or the 31st day in the case of appropriation of title,
or the end of the Term if earlier than such 181st or 31st day); (ee) the last
day of the Term (as automatically extended by six months in the case of an
activation under the CRAF Program) in the case of requisition of title to or use
of such property by the Government; and (if) the last day of the applicable
period referred to in clause (vi) above (or if earlier, the end of the Term
without the Lessee's having conformed at least one Canadair Regional Jet Series
200ER aircraft to the applicable requirements). An Event of Loss with respect to
the Aircraft shall be deemed to have occurred if any Event of Loss occurs with
respect to the Airframe.
"Excepted Payments" means collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of the
Owner Participant, the Owner Trustee in its individual capacity or any of their
respective successors, permitted assigns, directors, officers, employees,
servants and agents or Affiliates, pursuant to the Participation Agreement or
any other Operative Agreement or any indemnity hereafter granted to the Owner
Participant or the Owner Trustee in its individual capacity pursuant to the
Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the Aircraft
payable as a result of insurance claims paid for the benefit of, or losses
suffered by, the Owner Trustee or the Indenture Trustee in their respective
individual capacities or by the Owner Participant, or their respective
successors, permitted assigns or Affiliates, (iii) proceeds of insurance
maintained with respect to the Aircraft by the Owner Participant or any
Affiliate thereof (whether directly or through the Owner Trustee) in accordance
with Section 9(f) of the Lease, (iv) payments by the Lessee in respect of any
amounts payable under the Tax Indemnity Agreement, (v) any purchase price paid
to the Owner Participant for its interest in the Trust Estate, (vi) subject to
Section 3(f) of the Lease, payments constituting increases in Basic Rent
attributable to payments arising pursuant to the Tax Indemnity Agreement, (vii)
any payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above, (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described in
clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
"Expenses" has the meaning given to such term in Section 7.01(a) of the
Participation Agreement.
"Expiration Date" means the date specified as such in the Lease Supplement
executed and delivered on the Delivery Date.
-6-
"FAA Xxxx of Sale" means the xxxx of sale for the Airframe on AC Form
8050-2, or such other form as may be approved by the Aeronautics Authority,
executed in favor of the Owner Trustee and to be dated the Delivery Date.
"Fair Market Rental Value" or "Fair Market Sales Value" of the Airframe or
any Engine shall mean the value that would be obtained in an arms'-length
transaction between an informed and willing lessee-user or buyer-user (other
than a lessee currently in possession or a used equipment dealer) under no
compulsion to lease or buy, as the case may be, and an informed and willing
lessor or seller, as the case may be, under no compulsion to lease or sell, as
the same shall be specified by agreement between the Lessor and the Lessee or,
if not agreed to by the Lessor and the Lessee within a period of 15 days after
either party requests a determination, then as specified in an appraisal
prepared and delivered in New York City mutually agreed to by two recognized
independent aircraft appraisers, one of which shall be appointed by the Lessor
and the other of which shall be appointed by the Lessee, or, if such appraisers
cannot agree on such appraisal, an appraisal arrived at by a third independent
recognized appraiser chosen by the mutual consent of the two aircraft
appraisers. If either party should fail to appoint an appraiser within 15 days
of receiving notice of the appointment of an appraiser by the other party, then
such appraisal shall be made by the appraiser appointed by the first party. If
the two appraisers cannot agree on such appraisal and fail to appoint a third
independent recognized aircraft appraiser within 15 days after the appointment
of the second appraiser, then either party may apply to the American Arbitration
Association to make such appointment. The appraisal shall be completed within 30
days of the appointment of the last appraiser appointed. In determining Fair
Market Rental Value or Fair Market Sales Value by appraisal or otherwise, it
will be assumed that the Aircraft, Airframe or Engine is in the condition,
location and overhaul status in which it is required to be returned to the
Lessor pursuant to Section 12 of the Lease (except that a determination of Fair
Market Sales Value pursuant to Section 17 of the Lease shall be based on "as is,
where is" condition), that the Lessee has removed all Parts which it is entitled
to remove pursuant to Section 7 of the Lease and that the Aircraft is encumbered
by the Lease. For purposes of the preceding sentence and with respect to a
purchase of the Aircraft pursuant to Section 13(b) of the Lease, "encumbered by
the Lease" shall mean, with respect to Fair Market Sales Value, the Fair Market
Sales Value increased or decreased to reflect the benefits and burdens of the
Lease and other Operative Documents. Except as otherwise expressly provided in
the Lease, all appraisal costs will be shared equally by the Lessor and the
Lessee.
"Federal Aviation Administration" or "FAA" means the United States Federal
Aviation Administration and any successor agency or agencies thereto.
"Final Drawing" has the meaning given to such term in Section 1.01 of the
Intercreditor Agreement.
"Fixed Renewal Term" has the meaning given to such term in Section 13(a)
of the Lease.
-7-
"FNBM" means The First National Bank of Maryland, a national banking
association.
"Government means the United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
"Holder" means, as of any particular time, the Person in whose name a
Equipment Note shall be registered.
"Indemnitee" means each of Trust Company, in its individual capacity and
as Owner Trustee, the Subordination Agent, in its individual capacity and in its
capacity as Subordination Agent, each Liquidity Provider, the Owner Participant,
the Indenture Trustee, in its individual capacity and as trustee, the Escrow
Agent, the Paying Agent, the Pass Through Trustees and each Affiliate, officer,
director, employee, agent and servant of any of the foregoing Persons. No holder
of a Pass-Through Certificate shall be deemed to be an Indemnitee.
"Indenture" means the Trust Indenture and Security Agreement [N_______],
dated as of ______________ __, 199_, between the Owner Trustee and the Indenture
Trustee.
"Indenture Default" means any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
"Indenture Documents" has the meaning specified in the Granting Clause of
the Indenture.
"Indenture Event of Default" means each of the events specified in Section
7.01 of the Indenture.
"Indenture Indemnitee" means (i) the Indenture Trustee and each separate
or additional trustee appointed pursuant to the Indenture, (ii) the Escrow
Agent, (iii) the Subordination Agent, (iv) each Liquidity Provider, (v) the
Paying Agent, (vi) each Pass-Through Trustee and (vii) each of the respective
directors, officers, employees, agents and servants of each of the persons
described in clauses (i) through (vi).
"Indenture Supplement" means (a) the Trust Indenture and Security
Agreement Supplement No. 1, substantially in the form of Exhibit A to the
Indenture, which shall describe with particularity the Aircraft included in the
property of the Owner Trustee covered by the Indenture by reference to the Lease
Supplement, and which creates a first priority security interest in the Aircraft
and (b) any other supplement to the Indenture from time to time executed and
delivered.
"Indenture Trustee" means The First National Bank of Maryland, a national
banking association, as indenture trustee under the Operative Documents.
-8-
"Indenture Trustee's Liens" means any Lien against, on or with respect to
the Aircraft, any Engine, the Lessor's Estate or the Trust Indenture Estate or
any part thereof resulting from (i) claims against the Indenture Trustee not
related to the administration of the Trust Indenture Estate or any transactions
pursuant to the Indenture or any document included in the Trust Indenture
Estate, (ii) any act or omission of the Indenture Trustee which is not related
to the transactions contemplated by the Operative Agreements or is in violation
of any of the terms of the Operative Agreements, or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the Lessee
has not indemnified (and is not obligated to indemnify) the Indenture Trustee in
such capacity.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Lessee that is independent in
fact, does not have any direct financial interests, or any material indirect
financial interest, in the Lessee or any Affiliate of the Lessee, and is not
connected with the Lessee or any Affiliate of the Lessee, as an officer,
employee, promoter, underwriter, trustee, partner, director or Person performing
similar functions; provided, that if the Indenture Trustee shall not have
received written notice of such an appointment at least 10 days prior to the
Prepayment Date, "Independent Investment Banker" shall mean such an institution
appointed by the Indenture Trustee.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
August 13, 1998, among the Pass Through Trustees, the Class A Liquidity
Provider, the Class B Liquidity Provider, the Class C Liquidity Provider and the
Subordination Agent.
"Interest Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Issuance Date" means August 13, 1998.
"Lease" means the Lease Agreement [N______], dated as of ______ _____,
199_ between the Owner Trustee and the Lessee.
"Lease Supplement" means any Lease Supplement, substantially in the form
of Exhibit A to the Lease, entered into between the Lessor and the Lessee for
the purpose of leasing the Aircraft under and pursuant to the terms of the
Lease, including any amendment thereto entered into subsequent to the Delivery
Date.
"Lessee" means Midway Airlines Corporation, a Delaware corporation.
"Lessee Documents" means (x) the Operative Agreements to which the Lessee
is a party and (y) the Pass-Through Trust Agreements.
"Lessor" means First Union Trust Company, National Association, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement.
-9-
"Lessor's Cost" has the meaning given to such term in Exhibit B of the
Lease.
"Lessor's Estate" means all estate, right, title and interest of the Owner
Trustee in and to the Aircraft, and Engines and the Operative Agreements (other
than the Tax Indemnity Agreement) including, without limitation, all amounts of
Rent, insurance proceeds and requisition, indemnity or other payments of any
kind, but specifically excluding any Excepted Payments.
"Lessor's Liens" means Liens against, on or with respect to the Aircraft,
any Engine, the Lessor's Estate or the Trust Indenture Estate or any part
thereof, title thereto or any interest therein arising as a result of (i) claims
against or affecting the Lessor, in its individual capacity or as Owner Trustee,
or the Owner Participant, in each case not related to the Operative Agreements
or the transactions contemplated thereby, (ii) acts or omissions of the Lessor
in its individual capacity or as Owner Trustee, or of the Owner Participant not
contemplated or permitted under the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to Articles 6 or 7 of the Participation Agreement and which are not
required to be indemnified against by the Lessee pursuant to the Tax Indemnity
Agreement, or (iv) claims against the Lessor, in its individual capacity or as
Owner Trustee, or the Owner Participant arising from the transfer by the Lessor
or the Owner Participant of its interests in the Aircraft or any Engine other
than a transfer of the Aircraft pursuant to Section 5(b), 7(e), 13(b), 14(a) or
17 of the Lease and other than a transfer pursuant to the exercise of the
remedies set forth in Section 17 of the Lease.
"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
security interest, claim, or other similar interest of any nature whatsoever.
"Liquidity Facility" means each of the three Irrevocable Revolving Credit
Agreements (consisting of a separate Revolving Credit Agreement with the
Liquidity Provider with respect to each Pass-Through Trust) between the
Subordination Agent, as borrower, and the Liquidity Provider, each dated as of
the Issuance Date.
"Liquidity Provider" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Loan Participant" means and includes each registered holder from time to
time of an Equipment Note issued under the Indenture including, so long as it
holds any Equipment Notes issued under the Indenture, the Pass-Through Trustee
under each Pass-Through Trust Agreement.
"Majority in Interest of Holders" means, as of a particular date of
determination, the Holders of more than 50% of the aggregate unpaid principal
amount of all Equipment Notes Outstanding as of such date.
-10-
"Make-Whole Premium" means with respect to any Equipment Note, an amount
determined as of the day before the applicable Prepayment Date (or date of
purchase, as the case may be) which an Independent Investment Banker determines
to be equal to the excess, if any, of (i) the present value of the remaining
scheduled payments of such principal amount or portion thereof and interest
thereon to the maturity date of such Equipment Note assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield (in the case of the Series A Equipment Notes and Series B Equipment Notes)
and the Treasury Yield plus .50% (in the case of the Series C Equipment Notes
and the Series D Equipment Notes) over (ii) the outstanding principal amount of
such Equipment Note plus accrued interest (other than any overdue portion
thereof).
"Manufacturer" means Bombardier, Inc., a Canadian corporation.
"Minimum Liability Amount" has the meaning given to such term in Exhibit B
to the Lease.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Non-U.S. Person" means any Person other than a U.S. Person.
"Note Purchase Agreement" means the Note Purchase Agreement, dated as of
the Issuance Date, among the Lessee, the Subordination Agent, the Escrow Agent,
the Paying Agent and the Pass-Through Trustee under each Pass-Through Trust
Agreement providing for, among other things, the issuance and sale of certain
equipment notes.
"Offering Memo" means the Lessee's August 6, 1998 Offering Memorandum
concerning the Pass-Through Certificates.
"Officer's Certificate" means, when delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner Trustee,
as the case may be, and delivered to the Indenture Trustee. Each such
certificate shall include the statements provided for in Section 15.07 of the
Indenture.
"Operative Agreements" means the Participation Agreement, the Trust
Agreement, the FAA Xxxx of Sale, the Warranty Xxxx of Sale, the Purchase
Agreement, the Purchase Agreement Assignment, the Engine Warranty Assignment,
the PAA Consent, the Lease, each Lease Supplement, any Owner Participant
Guaranty, the Equipment Notes outstanding at the time of reference, the
Indenture, each Indenture Supplement and the Tax Indemnity Agreement.
"Opinion of Counsel" means when delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the Lessee
may be (i) an attorney employed by the Lessee who is generally empowered to
deliver such written opinions, (ii) Fulbright & Xxxxxxxx L.L.P., or (iii) other
counsel designated by the
-11-
Lessee and reasonably satisfactory to the Indenture Trustee, and (b) for the
Owner Trustee or the Indenture Trustee, an attorney selected by such Person and
reasonably satisfactory to the Lessee and, in the case of the Owner Trustee,
reasonably satisfactory to the Indenture Trustee.
"Outstanding" means, when used with respect to Equipment Notes, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Equipment Notes theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Equipment Notes theretofore canceled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Equipment Notes for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee in
trust for the Holders of such Equipment Notes pursuant to Section
14.01 of the Indenture; provided that if such Equipment Notes are to
be prepaid, notice of such prepayment has been duly given pursuant
to the Indenture or provision therefor satisfactory to the Indenture
Trustee has been made; and
(iii) Equipment Notes in exchange for or in lieu of which other
Equipment Notes have been executed and delivered pursuant to Article
II of the Indenture.
"Owner Participant" means _________________, a _________________.
"Owner Participant Guarantor" means the provider of an Owner Participant
Guaranty.
"Owner Participant Guaranty" means any guaranty delivered to support the
obligations of the Owner Participation under the Operative Agreements in
connection with the transfer by the Owner Participant of the Beneficial
Interest.
"Owner Trustee" means Trust Company, not in its individual capacity except
as otherwise expressly stated, but solely as trustee under the Trust Agreement.
"PAA Consent" means any consent to the Purchase Agreement Assignment
delivered by the Manufacturer on the Delivery Date and pertaining to the
Aircraft.
"Participants" means, collectively, the Owner Participant and the
Pass-Through Trustee with respect to each of the Pass-Through Trust Agreements;
"Participant" means, individually, one of the Participants.
-12-
"Participation Agreement" the Participation Agreement [N________], dated
as of __________ __, 199_, among the Lessee, the Owner Trustee not in its
individual capacity except as otherwise expressly provided therein, but solely
as owner trustee, the Owner Participant, the Indenture Trustee, the Pass-Through
Trustees and the Subordination Agent.
"Parts" means any and all appliances, parts, instruments, appurtenances,
accessories, furnishings, seats, and other equipment of whatever nature (other
than Engines or engines and temporary replacement parts as provided in Section 8
of the Lease and cargo containers) which may from time to time be incorporated
or installed in or attached to any Airframe or any Engine, exclusive of any
items leased by the Lessee from third parties and not required in the navigation
of the Aircraft.
"Pass-Through Certificates" means any of the Pass-Through Certificates,
1998-1A, the Pass-Through Certificates, 1998-1B, the Pass-Through Certificates,
1998-1C or the Pass Through Certificates, 1998-1D, in each case as issued by the
related Pass-Through Trust; and "Pass-Through Certificates" means all of such
Pass-Through Certificates.
"Pass-Through Documents" means the Pass-Through Trust Agreements, the
Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement and
the Liquidity Facilities.
"Pass-Through Trust" means the Midway Airlines 1998-1 Pass-Through Trust
Class A, Midway Airlines 1998-1 Pass-Through Trust Class B, Midway Airlines
1998-1 Pass-Through Trust Class C and Midway Airlines 1998-1 Pass-Through
Trust-Class D, in each case formed pursuant to the related Series Supplement in
accordance with the Pass-Through Trust Agreement; and "Pass-Through Trusts"
means all of such Pass-Through Trusts.
"Pass-Through Trust Agreement" means each of the four Pass-Through Trust
Agreements dated as of August 13, 1998 among the Lessee and the Pass-Through
Trustee (which shall include each Successor Pass-Through Trust Agreement entered
into pursuant to Section 11.01 of each thereof).
"Pass-Through Trustee" The First National Bank of Maryland, a national
banking association, in its capacity as Pass-Through Trustee under each
Pass-Through Trust Agreement.
"Past Due Rate" means in respect of any principal of or interest on or any
other amounts payable in respect of any Equipment Note that is not paid when due
to any Holder, a rate per annum during the period from and including the due
date to but excluding the date on which such amount is paid in full equal to 1%
plus the interest rate applicable to such Equipment Note.
-13-
"Payment Date" means each January 2 and July 2, commencing on _________ 2,
199_.
"Permitted Air Carrier" means (a) any Section 1110 Person and (b) any
foreign air carrier that is principally based in any foreign country listed on
Exhibit E to the Lease, except those that do not maintain normal diplomatic
relations with the United States.
"Permitted Investments" means (a) direct obligations of the United States
of America or any agency or instrumentality thereof, (b) obligations fully
guaranteed by the United States of America or any agency or instrumentality
thereof, (c) any mutual fund the portfolio of which is limited to obligations of
the type described in clauses (a) and (b), including any proprietary mutual fund
of The First National Bank of Maryland for which such bank or an affiliate is
investment advisor or to which such bank provides other services and receives
reasonable compensation for such services, (d) certificates of deposit issued
by, or bankers' acceptances of, or time deposits or a deposit account with, any
bank, trust company, or national banking association incorporated or doing
business under the laws of the United States of America or one of the states
thereof, having a combined capital and surplus of at least $100,000,000 and
having a rating of "A" or better from the Xxxxx Bank Watch Service, (e)
commercial paper issued by companies in the United States which directly issue
their own commercial paper and which are doing business under the laws of the
United States of America or one of the states thereof and in each case having a
rating assigned to such commercial paper by a nationally recognized rating
organization in the United States of America equal to the highest rating
assigned by such organization, or (f) obligations of the type described in
clauses (a), (b), (d), or (e) above, purchased from any bank, trust company, or
banking association referred to in clause (d) above pursuant to repurchase
agreements obligating such bank, trust company, or banking association to
repurchase any such obligation not later than 30 days after the purchase of any
such obligation. Unless otherwise specified in writing by the Owner Trustee, all
such Permitted Investments shall mature not later than 30 days from the date of
purchase.
"Permitted Lien" has the meaning given to such term in Section 10 of the
Lease.
"Permitted Sublessee" means (a) any Permitted Air Carrier or (b) any
airframe or engine manufacturer, or Affiliate of such a manufacturer, who is
domiciled in the United States of America or a country listed on Exhibit E to
the Lease.
"Person" means any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
"Placement Agents" means Xxxxxx Xxxxxxx & Co. Incorporated and Credit
Suisse First Boston.
-14-
"Placement Agreement" means the Purchase Agreement dated August 6, 1998
among the Lessee and the Placement Agents.
"Prepayment Date" has the meaning given to such term in Section 6.02(b) of
the Indenture.
"Prepayment Price" has the meaning given to such term in Section 6.02(b)
of the Indenture.
"Purchase Agreement" means Bombardier Regional Aircraft Division Purchase
Agreement No. PA-0393 dated September 17, 1997, as amended, between the Company
and the Manufacturer (including all exhibits thereto, together with all letter
agreements entered into that by their terms constitute part of any such Purchase
Agreement).
"Purchase Agreement Assignment" means the Purchase Agreement and Engine
Warranties Assignment [N ____], dated as of even date with the Participation
Agreement, between Lessee and Owner Trustee.
"Purchase Price" means an amount equal to Lessor's Cost.
"Rating Agency" means Moody's or S&P, as the context requires.
"Record Date" means, with respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 15 for January 2
Payment Dates and June 15 for July 2 Payment Dates, whether or not such date is
a Business Day.
"Recourse Amount" has the meaning given to such term in Section 15.07 of
the Participation Agreement.
"Refinancing" means a non-recourse loan to the Lessor arranged pursuant to
Section 13.01 of the Participation Agreement.
"Register" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registrar" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registration Rights Agreement" means the Exchange and Registration Rights
Agreement, dated as of August 13, 1998, among the Placement Agents, FNBM, as
Pass-Through Trustee, and the Lessee.
"Registration Rights Event" has the meaning given to such term in the
Registration Rights Agreement.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and supplemented
and in effect from time to time.
-15-
"Remaining Weighted Average Life" means on a given date with respect to
any Equipment Note the number of days equal to the quotient obtained by dividing
(i) the sum of each of the products obtained by multiplying (a) the amount of
each then remaining scheduled payment of principal of such Equipment Note by (b)
the number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Equipment Note.
"Renewal Term" has the meaning given to such term in Section 13(a) of the
Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Rent Payment Date" means each Payment Date during the Term.
"Replacement Aircraft" means any Aircraft of which a Replacement Airframe
is part.
"Replacement Airframe" means a Canadair Regional Jet Series 200ER series
aircraft or a comparable or improved model of such aircraft of the Manufacturer
(except Engines or engines from time to time installed thereon) which shall have
become subject to the Lease pursuant to Section 8 thereof.
"Replacement Closing Date" has the meaning given such term in Section 8(d)
of the Lease.
"Replacement Engine" means a CF34-3B1 Series 200 engine (or engine of the
same or another manufacturer of a comparable or an improved model and suitable
for installation and use on the Airframe), and which shall have become subject
to the Lease pursuant to Section 7(e) thereof.
"Responsible Officer" means, with respect to the Owner Trustee or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate officer
of a party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant, agreement
or obligation of such party pursuant to any Operative Agreement, would have
responsibility for and knowledge of such matter and the requirements of any
Operative Agreement with respect thereto.
"S&P" means Standard & Poor's Ratings Group.
"SEC" means the Securities and Exchange Commission of the United States
and any successor agencies or authorities.
-16-
"Section 1110 Person" means a Citizen of the United States who is an
air carrier holding a valid air carrier operating certificate issued pursuant
to 49 U.S.C. ch. 447 for aircraft capable of carrying 10 or more individuals.
"Secured Obligations" has the meaning specified in the Granting Clause of
the Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Series "A" or "Series A Equipment Notes" means the Equipment Notes issued
and designated as "Series A" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series A".
"Series "B" or "Series B Equipment Notes" means the Equipment Notes issued
and designated as "Series B" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series B".
"Series "C" or "Series C Equipment Notes" means the Equipment Notes issued
and designated as "Series C" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series C".
"Series "D" or "Series D Equipment Notes" means the Equipment Notes issued
and designated as "Series D" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series D".
"Specified Default" means (a) an event or condition described in Section
16(a), (f), (g) or (h) of the Lease that, after the giving of notice or lapse of
time, or both, would mature into an Event of Default, or (b) any Event of
Default.
"Specified Investments" means (a) direct obligations of the United States
of America or obligations fully guaranteed by the United States of America; (b)
any mutual fund the portfolio of which is limited to obligations of the type
described in clause (a), including any proprietary mutual fund of The First
National Bank of Maryland for which such bank or an affiliate is investment
advisor or to which such bank provides other services and receives reasonable
compensation for such services; (c) commercial paper rated A-1/P-1 by S&P and
Moody's, respectively or, if such ratings are unavailable, rated by any
nationally recognized rating organization in the United States equal to the
highest rating assigned by such rating organization; (d) investments in
negotiable certificates of deposit, time deposits, banker's acceptances,
commercial paper or other direct obligations of, or obligations guaranteed by,
commercial banks organized under the laws of the United States or of any
political subdivision thereof (or any U.S. branch of a foreign bank) with issuer
ratings of at least B/C by Thomson
-17-
Bankwatch, having maturities no later than 90 days following the date of such
investment; (e) overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers; or (f) overnight repurchase
agreements with respect to the securities described in clause (a) above entered
into with an office of a bank or trust company which is located in the United
States of America or any bank or trust company which is organized under the laws
of the United States or any state thereof and has capital, surplus and undivided
profits aggregating at least $500 million.
"Sublease" means any sublease agreement between the Lessee and a Permitted
Sublessee as permitted by Section 5(b) of the Lease.
"Subordination Agent" means The First National Bank of Maryland, a
national banking association, in its capacity as Subordination Agent.
"Subsequent Renewal Term" has the meaning given to such term in Section
13(a) of the Lease.
"Supplemental Rent" means (a) all amounts, liabilities and obligations
which the Lessee assumes or agrees to perform or pay under the Lease or under
the Participation Agreement or Tax Indemnity Agreement or any other Operative
Agreement to the Lessor, the Owner Participant, the Indenture Trustee, the
Subordination Agent, any Liquidity Provider or others, including payments of
Termination Value, EBO Price, and amounts calculated by reference to Termination
Value, any amounts of Make-Whole Premium payable under the Indenture to the
extent provided in Section 3(c) of the Lease, and all amounts required to be
paid by Lessee under the agreements, covenants, and indemnities contained in the
Lease or in the Participation Agreement or the Tax Indemnity Agreement or any
other Operative Agreement, but excluding Basic Rent, and (b) all amounts that
the Owner Trustee is obligated to pay in accordance with clause (b) of the last
paragraph of Section 2.04 of the Indenture.
"Tax" or "Taxes" has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
"Tax Indemnitee" means each of Trust Company, individually and as Owner
Trustee, the Owner Participant and the Indenture Trustee.
"Tax Indemnity Agreement" the Tax Indemnity Agreement to be entered into
by the Lessee and the Owner Participant on the Delivery Date.
"Term" has the meaning given to such term in Section 3(a) of the Lease.
"Termination Date" means each date listed in the column entitled
"Termination Date" in Exhibit D to the Lease.
-18-
"Termination Value" means (a) as of any Termination Date during the Basic
Term, the amount determined as set forth in Exhibit C to the Lease for that
Termination Date, and (b) during any Renewal Term, the amount for the date
involved, determined in accordance with Section 13(a) of the Lease, in either
case adjusted as required by Section 3(d) of the Lease.
"Transaction Costs" means those costs and expenses set forth in Section
8.01(a) of the Participation Agreement to be borne by the Owner Participant.
"Transportation Code" means Title 49 of the United States Code, subtitle
VII, as amended and in effect on the date of the Lease or as subsequently
amended, or any successor or substituted legislation at the time in effect and
applicable, and the regulations promulgated pursuant thereto.
"Treasury Yield" means, at the time of determination with respect to any
Equipment Note, the interest rate (expressed as a semi-annual equivalent and as
a decimal and, in the case of United States Treasury bills, converted to a bond
equivalent yield) determined to be the per annum rate equal to the semi-annual
yield to maturity for United States Treasury securities maturing on the Average
Life Date on such Equipment Note and trading in the public securities markets
either as determined by interpolation between the most recent weekly average
yield to maturity for two series of United States Treasury securities, trading
in public securities markets, (i) one maturing as close as possible to, but
earlier than, the Average Life Date of such Certificate and (ii) the other
maturing as close as possible to, but later than, the Average Life Date of such
Equipment Note, in each case as published in the most recent H. 15(519) or, if a
weekly average yield to maturity for United States Treasury securities maturing
on the Average Life Date of such Equipment Note is reported on the most recent
H. 15(519), such weekly average yield to maturity as published in such
H.15(519). "H.15(519)" means the weekly statistical release designated as such,
or any successor publication, published by the Board of Governors of the Federal
Reserve System. The date of determination of a Make-Whole Premium will be the
third Business Day prior to the applicable prepayment date and the "most recent
H.15(519)" means the H. 15(519) published prior to the close of business on the
third Business Day prior to the applicable prepayment date.
"Trust Agreement" means the Trust Agreement [N____] dated as of _________
__, between the Owner Participant and Trust Company.
"Trust Company" means First Union Trust Company, National Association.
"Trust Estate" means the Lessor's Estate.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
-00-
"Xxxxx Xxxxxxxxx Xxxxxx" means all estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interest, and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of the
Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee
or the Owner Participant pursuant to the Indenture.
"United States", "U.S." or "US" means the United States of America.
"U.S. Person" means a Person described in ss. 7701(a)(30) of the Code.
"Warranty Xxxx of Sale" means the full warranty xxxx of sale covering the
Aircraft (and specifically referring to each Engine) executed by the owner of
the Aircraft in favor of the Owner Trustee and to be dated the Delivery Date.
-20-
Exhibit A to
Trust Indenture and
Security Agreement
Indenture Supplement No. __
This Indenture Supplement No. __ dated ____________, 199_, of First Union
Trust Company, National Association, a national banking association, not in its
individual capacity but solely as owner trustee (herein called the "Owner
Trustee") under the Trust Agreement [N_____] dated as of ________________, (the
"Trust Agreement") between First Union Trust Company, National Association, and
the Owner Participant named therein,
WITNESSETH:
WHEREAS, the Indenture provides for the execution and delivery of this
Indenture Supplement which shall particularly describe the Aircraft included in
the property covered by the Indenture.
WHEREAS, the Trust Indenture and Security Agreement [N_____] dated as of
__________ (the "Indenture") between the Owner Trustee and The First National
Bank of Maryland (herein called the "Indenture Trustee") provides for the
execution and delivery of an Indenture Supplement substantially in the form of
this Indenture Supplement No. __, which Supplement shall particularly describe
the Aircraft included in the Trust Indenture Estate, and shall specifically
mortgage such Aircraft to the Indenture Trustee.
WHEREAS, the Indenture relates to the Aircraft and the Engines described
in the following paragraph and a counterpart of the Indenture is attached to and
made a part of this Indenture Supplement No. __, and this Indenture Supplement
No. __, together with such attachment, is being filed for recordation on or
promptly after the date of this Supplement No. __ with the Federal Aviation
Administration as one document.
NOW, THEREFORE, to secure the prompt payment of the principal of and
Make-Whole Premium, if any, and interest on, and all other amounts due with
respect to, all Outstanding Equipment Notes under the Indenture and all other
amounts due hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions for the benefit of the Holders and
contained in the Indenture, the Participation Agreement and the Equipment Notes,
and the prompt payment of any and all amounts from time to time owing under the
Participation Agreement by the Owner Trustee or the Lessee to the Holders and
the Indenture
Indemnitees and for the uses and purposes and subject to the terms and
provisions of the Indenture and the Equipment Notes, and in consideration of the
premises and of the covenants contained in the Indenture, and of the purchase of
the Equipment Notes by the Holders, and of the sum of $1 paid to the Owner
Trustee by the Indenture Trustee at or before the delivery of the Indenture, the
receipt of which is hereby acknowledged, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged, granted a
security interest in, and confirmed, and does hereby grant, bargain, sell,
assign, transfer, convey, mortgage, pledge, grant a security interest in, and
confirm, unto the Indenture Trustee, its successors and assigns, in trust for
the equal and ratable security and benefit of the Holders, in the trust created
by the Indenture, and subject to all of the terms, conditions, provisions and
limitations set forth in the Indenture, a first priority security interest in
and mortgage lien on all estate, right, title and interest of the Owner Trustee
in, to and under the following described property:
AIRFRAME
One Airframe identified as follows:
FAA Manufacturer's
Registration Serial
Manufacturer Model Number Number
------------ ----- ------------ --------------
Canadair CL-600-2B19 N___ ___________
together with all appliances, equipment, instruments and accessories (including,
without limitation, radio and radar) from time to time belonging thereto, owned
by the Owner Trustee and installed in or appurtenant to said aircraft.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated takeoff
horsepower or the equivalent thereof, identified as follows:
Manufacturer's
Serial
Manufacturer Model Number
------------ ----- --------------
General Electric CF34-3B1 _____________
_____________
-2-
together with all equipment and accessories belonging thereto, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to such
aircraft engines.
Together with all substitutions, replacements and renewals of the property
described above, and all property owned by the Owner Trustee which shall
hereafter become physically attached to or incorporated in the property
described above, whether the same are now owned by the Owner Trustee or shall
hereafter be acquired by it.
As further security for the obligations referred to above and secured by
the Indenture and hereby, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors and assigns, for the
security and benefit of the Holders, in the trust created by the Indenture, and
subject to all of the terms, conditions, provisions and limitations set forth in
the Indenture, all of the estate, right, title and interest of the Owner Trustee
in, to and under the Lease Supplement (other than Excepted Payments, if any)
covering the property described above.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Holders for the uses and purposes and subject to the terms and provisions
set forth in the Indenture.
This Supplement shall be construed as supplemental to the Indenture and
shall form a part thereof, and the Indenture is hereby incorporated by reference
herein and is hereby ratified, approved and confirmed.
This Supplement is being delivered in the State of New York.
-3-
IN WITNESS WHEREOF, the Owner Trustee has caused this Indenture Supplement
No. 1 to be duly executed as of the date first written above by one of its
officers thereunto duly authorized.
First Union Trust Company, National
Association, not in its individual capacity,
except as specifically set forth herein, but
solely as Owner Trustee
By: _________________________________________
Name:
Title:
-4-
Exhibit B
to
Trust Indenture and
Security Agreement
[Form of Certificate]
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE.
ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER
THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS
IS AVAILABLE.
No. _________ $____________
EQUIPMENT TRUST EQUIPMENT NOTE [N_____]
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual
capacity but solely as Owner Trustee under Trust Agreement [N_____] dated as of
______________
SERIES _____
Interest Rate Maturity
___% ____________, 2___
First Union Trust Company, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee (herein
in such capacity called the "Owner Trustee") under that certain Trust Agreement
[N_____] dated as of __________, between the Owner Participant named therein and
(herein as such Trust Agreement may be amended or supplemented from time to time
called the "Trust Agreement"), hereby promises to pay to The First National Bank
of Maryland, as Subordination Agent, or its registered assigns, the principal
sum of ______________________ ________________ Dollars, together with interest
on the principal outstanding from time to time, semiannually on each January 2
and July 2, on such principal sum at the rate per annum set forth above;
provided that, under certain circumstances including, in the event a
Registration Event (as defined in the Indenture referred to below) does not
occur on or prior to the date (the "Increase Date") required pursuant to the
Registration Rights Agreement (as defined in the Indenture
referred to below), such interest rate shall be increased by 0.5% from and
including the Increase Date to but excluding the date such Registration Event
does occur. The principal amount of this Equipment Note shall be payable in
installments on the dates and hereto in amounts set forth in Schedule I hereto.
Notwithstanding the foregoing, the final payment made on this Equipment Note
shall be in an amount sufficient to discharge in the full the unpaid principal
amount and all accrued and unpaid interest on, and any other amounts due under,
this Equipment Note. Notwithstanding anything to the contrary contained herein,
if any date on which a payment under this Equipment Note becomes due and payable
is not a Business Day, then such payment shall not be made on such scheduled
date but shall be made on the next succeeding Business Day and if such payment
is made on such next succeeding Business Day, no interest shall accrue on the
amount of such payment during such extension.
This Equipment Note shall bear interest at the Past Due Rate on any
principal hereof and on any other amount payable hereunder or under the
Indenture which shall not be paid in full when due (whether at stated maturity,
by acceleration, by mandatory prepayment or otherwise), for the period from and
including the date thereof to but excluding the date the same is paid in full,
payable from time to time on demand of the Indenture Trustee.
Principal and interest and other amounts due hereunder shall be payable at
the office or agency of The First National Bank of Maryland (the "Indenture
Trustee") maintained for such purpose in immediately available funds prior to
12:00 noon. (New York time) on the due date thereof and the Indenture Trustee
shall remit all such amounts received by it to the Holders at such account or
accounts at such financial institution or institutions as the Holders shall have
designated to the Indenture Trustee in writing, in immediately available funds,
such payment to be made if the payment was received prior to 12:00 noon, New
York time by the Indenture Trustee on any Business Day, by 1 p.m. New York time
on such Business Day; otherwise, the Indenture Trustee shall make payment
promptly, but not later than 11:00 A.M. New York time on the next succeeding
Business Day; provided that, at the option of the Indenture Trustee or its
Paying Agent, interest may be paid by mailing a check therefor payable to or
upon the written order of the registered holder entitled thereto at his last
address as it appears on the Register. If any amount payable under this
Certificate, or under the Indenture, falls due on a day that is not a Business
Day, then such sum shall be payable on the next succeeding Business Day, without
(provided that payment is made on such next succeeding Business Day) additional
interest thereon for the period of such extension.
First Union Trust Company, National Association and The First National
Bank of Maryland are not acting individually hereunder, but solely as Owner
Trustee and Indenture Trustee, respectively.
Any Person, other than the Subordination Agent and any Pass-Through
Trustee, who is acquiring the Equipment Notes will be deemed to represent and
warrant that (i) no assets of an employee benefit plan subject to Title I of
ERISA or an individual
-2-
retirement account or plan subject to Section 4975 of the Code, or any trust
established under any such plan or account, have been used to acquire or hold
any of the Equipment Notes, or (ii) that one or more administrative or statutory
exemptions from the prohibited transaction rules under Section 406 of ERISA and
Section 4975 of the Code applies to its purchase and holding of the Equipment
Notes such that its purchase and holding of the Equipment Notes will not result
in a non-exempt prohibited transaction under Section 406 of ERISA and Section
4975 of the Code.
This Equipment Note is one of a duly authorized issue of Equipment Notes
issued under the Trust Indenture and Security Agreement [N______] dated as of
___________ (the "Indenture") between the Owner Trustee and the Indenture
Trustee. Capitalized terms not otherwise defined herein shall have the meanings
given to them in the Indenture. Reference is made to the Indenture and all
supplements and amendments thereto (a copy of which is on file with the
Indenture Trustee at its principal corporate trust office) for a more complete
statement of the terms and provisions thereof, including a statement of the
properties conveyed, pledged and assigned thereby, the nature and extent of the
security, the respective rights of the Owner Trustee, the Owner Participant, the
Lessee, the Indenture Trustee and the Holders, and the terms upon which the
Equipment Notes are, and are to be, executed and delivered, to all of which
terms and conditions in the Indenture each Holder hereof agrees by its
acceptance of this Equipment Note.
This Equipment Note is subject to redemption as provided in Section 6.02
of the Indenture but not otherwise. This Equipment Note is also subject to
exchange and to purchase by the Owner Participant or the Owner Trustee as
provided in Section 8.02 of the Indenture but not otherwise. In addition, this
Equipment Note may be accelerated as provided in Section 7.02 of the Indenture.
Except as expressly provided in the Indenture, all payments of principal,
Make-Whole Premium, if any, and interest and other amounts to be made to the
Holder hereof by or at the behest of the Owner Trustee hereunder or under the
Indenture shall be made only from the income and proceeds from the Lessor's
Estate to the extent included in the Trust Indenture Estate and only to the
extent that the Owner Trustee shall have sufficient income or proceeds from the
Lessor's Estate to the extent included in the Trust Indenture Estate to enable
the Indenture Trustee to make such distributions in accordance with the terms of
the Indenture; provided that under the Lease, the Lessee is obligated to pay or
cause to be paid, to the extent such payments are not required to be made from
the assets subject to the Lien of this Indenture or the income and proceeds
received by the Indenture Trustee therefrom, any net loss arising from the
investment of funds held by the Indenture Trustee which but for an Event of
Default would be payable to Lessee, and each Holder hereof, by its acceptance of
this Equipment Note, agrees that it will (except as aforesaid) look solely to
the income and proceeds from the Trust Indenture Estate to the extent available
for distribution to the Holder hereof as provided above and that neither the
Owner Participant, nor the Owner Trustee, nor First Union Trust Company,
National Association, nor the Indenture Trustee is personally liable to the
Holder hereof for any amounts payable or
-3-
any liability under this Equipment Note or under the Indenture, except as
expressly provided in the Indenture, in the case of First Union Trust Company,
National Association, the Owner Trustee and the Indenture Trustee.
If, in accordance with and subject to the satisfaction of the conditions
set forth in Section 5.10 of the Participation Agreement, the Lessee shall
assume all of the obligations of the Owner Trustee hereunder, under the
Equipment Notes and all other Operative Agreements, the Owner Participant and
the Owner Trustee shall (except for prior acts) be released and discharged from
any further obligations hereunder and under the Equipment Notes and all other
Operative Agreements (except any obligations that have accrued prior to such
assumption).
The indebtedness evidenced by this Equipment Note is, to the extent and in
the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of the Secured Obligations (as defined in
the Indenture) in respect of [Series A Equipment Notes](1), [Series A and Series
B Equipment Notes](2) [Series A, Series B, and Series C Equipment Notes](3) and
this Equipment Note is issued subject to such provisions. The Holder of this
Certificate, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Indenture Trustee on such Holder's
behalf to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture, and (c) appoints the Indenture
Trustee such Holder's attorney-in-fact for such purpose.*
This Equipment Notes shall be construed in accordance with and governed by
the laws of the State of New York.
This Equipment Note shall not be secured by or be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose unless
authenticated by the Indenture Trustee as evidenced by the manual signature of
one of its authorized officers on the certificate below.
----------
(1) To be inserted in the case of a Series B Equipment Note.
(2) To be inserted in the case of a Series C Equipment Note.
(3) To be inserted in the case of a Series D Equipment Note.
* To be inserted for each Equipment Note other than any Series A Equipment
Note.
-4-
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to be
duly executed in its corporate name by its officer thereunto duly authorized.
Dated: _________________ FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION,
not in its individual capacity, but
solely as Owner Trustee
By: ___________________________________
Name:
Title:
-5-
[FORM OF INDENTURE TRUSTEE'S EQUIPMENT NOTE
OF AUTHENTICATION]
This is one of the Equipment Notes referred to in the within mentioned
Indenture.
Dated: _______________ THE FIRST NATIONAL BANK OF MARYLAND, as
Indenture Trustee
By: ___________________________________
Name:
Title:
Schedule I to Certificate
Principal Amortization
Payment Date Principal Amount
------------ ----------------
Exhibit A-4
Form of Trust Agreement
================================================================================
TRUST AGREEMENT [N___ML]
Dated as of ______________, 199__
between
_________________________,
as Owner Participant
and
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
_________________________,
One Canadair Regional Jet Series 200ER Aircraft
N___ML
================================================================================
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND TERMS...................................1
Section 1.01. Definitions.............................................1
ARTICLE II AUTHORITY TO EXECUTE CERTAIN OPERATIVE AGREEMENTS;
DECLARATION OF TRUST....................................2
Section 2.01. Authority to Execute Documents..........................2
Section 2.02. Declaration of Trust....................................2
[Section 2.03. Limitations on Control, Exceptions, Purpose.............3
(a) Limitations on Control............................3
(b) Certain Exceptions................................3
(c) Purpose...........................................4
ARTICLE III ACCEPTANCE AND DELIVERY OF AIRCRAFT; ISSUANCE OF LOAN
CERTIFICATES; LEASE OF AIRCRAFT; REPLACEMENT............4
Section 3.01. Authorization...........................................4
Section 3.02. Conditions Precedent....................................5
Section 3.03. Postponement of Delivery Date...........................5
Section 3.04. Authorization in Respect of a Replacement Airframe
or Replacement Engines..................................6
Section 3.05. Trust Agreement Remaining in Full Force and Effect......7
Section 3.06. Authorization in Respect of Return of an Engine.........7
ARTICLE IV RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME
FROM THE TRUST ESTATE...................................7
Section 4.01. Distribution of Payments................................7
Section 4.02. Method of Payments......................................8
ARTICLE V DUTIES OF THE OWNER TRUSTEE.............................9
Section 5.01. Notice of Event of Default..............................9
Section 5.02. Action Upon Instructions................................9
Section 5.03. Indemnification.........................................9
Section 5.04. No Duties Except as Specified in Trust Agreement
or Instructions........................................10
Section 5.05. No Action Except Under Specified Documents
or Instructions........................................10
ARTICLE VI THE OWNER TRUSTEE......................................11
Section 6.01. Acceptance of Trusts and Duties........................11
Section 6.02. Absence of Certain Duties..............................11
Section 6.03. No Representations or Warranties as to Certain Matters.12
Section 6.04. No Segregation of Monies Required; Investment Thereof..12
Section 6.05. Reliance Upon Certificates, Counsel and Agents.........13
Section 6.06. Not Acting in Individual Capacity......................13
Section 6.07. Fees; Compensation.....................................13
Section 6.08. Tax Returns............................................14
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PAGE
----
ARTICLE VII INDEMNIFICATION OF THE OWNER TRUSTEE BY THE OWNER
PARTICIPANT............................................14
Section 7.01. The Owner Participant to Indemnify the Owner Trustee...14
ARTICLE VIII [RESERVED]........................................15
ARTICLE IX SUCCESSOR OWNER TRUSTEES; CO-TRUSTEES..................15
Section 9.01. Resignation of the Owner Trustee; Appointment of
Successor..............................................15
Section 9.02. Co-Trustees and Separate Trustees......................16
ARTICLE X SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND
OTHER DOCUMENTS........................................18
Section 10.01. Supplements and Amendments.............................18
Section 10.02. Discretion as to Execution of Documents................18
Section 10.03. Absence of Requirements as to Form.....................18
Section 10.04. Distribution of Documents..............................19
ARTICLE XI MISCELLANEOUS..........................................19
Section 11.01. Termination of Trust Agreement.........................19
Section 11.02. The Owner Participant Has No Legal Title in Trust
Estate.................................................19
Section 11.03. Assignment, Sale, etc..................................19
Section 11.04. Trust Agreement for Benefit of Certain Parties Only....20
Section 11.05. Notices................................................20
Section 11.06. Severability...........................................20
Section 11.07. Waivers, etc...........................................20
Section 11.08. Counterparts...........................................20
Section 11.09. Binding Effect, etc....................................20
Section 11.10. Headings; References...................................20
Section 11.11. Governing Law..........................................21
Section 11.12. Administration of Trust................................21
-ii-
TRUST AGREEMENT [N___ML]
This TRUST AGREEMENT [N___ML], dated as of ________________, 199_
between _________________________, a ________________________ (together with its
successors and permitted assigns, the "Owner Participant"), and FIRST UNION
TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, in its
individual capacity only as expressly stated herein and otherwise not in its
individual capacity but solely as trustee hereunder (herein in such capacity
with its permitted successors and assigns called the "Owner Trustee").
W I T N E S S E T H :
ARTICLE I
DEFINITIONS AND TERMS
Section 1.01. Definitions. Unless the context shall otherwise
require and except as contained in this Section 1.01, the capitalized terms used
herein shall have the respective meanings assigned thereto in the Lease (as
hereinafter defined) for all purposes hereof. All definitions contained in this
Section 1.01 shall be equally applicable to both the singular and plural forms
of the terms defined. For all purposes of this Trust Agreement the following
terms shall have the following meanings:
"Excepted Property" has the meaning given to such term in the Trust
Indenture.
"First Union" means First Union Trust Company, National Association,
a national banking association.
"Lease" means Lease Agreement [N___ML] dated as of _____________,
199_, between the Lessor and the Lessee, as the same may be modified, amended or
supplemented from time to time. The term "Lease" shall also include each Lease
Supplement entered into pursuant to the terms of the Lease.
"Lessee" means Midway Airlines Corporation, a Delaware corporation,
and its successors and permitted assigns, as the lessee under the Lease.
"Owner Participant" means the Person identified as such in the
introduction hereto.
"Owner Trustee" means the Person identified as such in the
introduction hereto.
"Participation Agreement" means Participation Agreement [N___ML],
dated as of _______________, 199_, among the Lessee, the Owner Participant, the
Lessor, the Indenture Trustee, the Pass Through Trustee and the Subordination
Agent, as the same may be amended, modified or supplemented from time to time.
"Trust Agreement" means this Trust Agreement [N___ML] dated as of
________________, 199_ between First Union and the Owner Participant, as the
same may be amended, modified or supplemented from time to time.
"Trust Estate" means all right, title and interest of the Owner
Trustee in and to the Aircraft, any Engines and the Operative Agreements (except
the Tax Indemnity Agreement) including, without limitation, all amounts of Rent,
insurance proceeds and requisition, indemnity or other payments of any kind
payable pursuant to the terms of such agreements for or with respect to the
Aircraft, including, without limitation, any and all payments and proceeds
received by the Owner Trustee after the termination of the Lease with respect to
the Aircraft resulting from the sale, lease or other disposition thereof and all
other property identified in the Granting Clauses of the Trust Indenture;
subject, however, to the provisions of and the Lien created by the Trust
Indenture. Notwithstanding the foregoing, "Trust Estate" shall not include any
Excepted Property.
"Trust Indenture" means Trust Indenture and Security Agreement
[N___ML], dated as of ____________, 199_, between the Owner Trustee and the
Indenture Trustee, as the same may be amended, modified, or supplemented from
time to time. The term "Trust Indenture" shall also include each Indenture
Supplement entered into pursuant to the terms of the Trust Indenture.
ARTICLE II
AUTHORITY TO EXECUTE CERTAIN OPERATIVE AGREEMENTS;
DECLARATION OF TRUST
Section 2.01. Authority to Execute Documents. The Owner Participant
hereby authorizes and directs the Owner Trustee (i) to execute and deliver the
Participation Agreement, the Lease, the Lease Supplement covering the Aircraft,
the Trust Indenture, the Indenture Supplement covering the Aircraft, the Loan
Certificates and any other agreements, instruments or documents, to which the
Owner Trustee is a party in the respective forms thereof in which delivered from
time to time by the Owner Participant to the Owner Trustee for execution and
delivery and (ii) subject to the terms hereof, to exercise its rights (upon
instructions received from the Owner Participant) and perform its duties under
the documents referred to in this Section in accordance with the terms thereof.
Section 2.02. Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Trust Estate upon the trusts hereinafter set
forth for the use and
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benefit of the Owner Participant, subject, however, to the provisions of and the
Lien created under the Trust Indenture.
[Section 2.03. Limitations on Control, Exceptions, Purpose.
So long as the Owner Participant is not a "citizen of the United States"
(a "United States Citizen") as defined in Section 40102(a)(15) of the Act, the
Owner Participant and Owner Trustee agree to comply with the following terms and
conditions:
(a) Limitations on Control. Notwithstanding any other provision of
this Trust Agreement, but subject to paragraph (b) of this Section 2.03,
the Owner Participant will have no rights or powers to direct, influence
or control the Owner Trustee in the performance of the Owner Trustee's
duties under this Trust Agreement in connection with matters involving the
ownership and operation of the Aircraft by the Owner Trustee. In all
matters involving the ownership and operation of the Aircraft by the Owner
Trustee, the Owner Trustee shall have absolute and complete discretion in
connection therewith and shall be free of any kind of influence or control
whatsoever by the Owner Participant, and the Owner Trustee shall exercise
its duties under this Trust Agreement in connection with matters involving
the ownership and operation of the Aircraft by the Owner Trustee as it, in
its discretion, shall deem necessary to protect the interests of the
United States, notwithstanding any countervailing interest of any foreign
power which, or whose citizens, may have a direct or indirect interest in
the Owner Participant and any such action by the Owner Trustee shall not
be considered malfeasance or in breach of any obligation which the Owner
Trustee might otherwise have to the Owner Participant; provided, however,
that subject to the foregoing limitations, the Owner Trustee shall
exercise its discretion in all matters involving the ownership and
operation of the Aircraft by the Owner Trustee with due regard for the
interests of the Owner Participant. In exercising any of its rights and
duties under this Trust Agreement in connection with matters which may
arise not relating to the ownership and operation of the Aircraft, the
Owner Trustee shall be permitted to seek the advice of the Owner
Participant before taking, or refraining from taking, any action with
respect thereto. The Owner Trustee shall notify the Owner Participant of
its exercise of rights and duties under this Trust Agreement in connection
with matters involving the ownership and operation of the Aircraft by the
Owner Trustee.
(b) Certain Exceptions. Subject to the requirements of the preceding
paragraph (a), the Owner Trustee agrees that it will not, without the
prior written consent of the Owner Participant, (i) sell, mortgage, pledge
or otherwise dispose of the Aircraft or other assets held in the Trust
Estate relating thereto except as otherwise expressly provided for herein,
or (ii) amend the Lease, any
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Permitted Sublease or other Operative Agreements or give any consents
thereunder.
(c) Purpose. The purpose of this Section 2.03 is to give the Owner
Trustee the power to manage and control the Aircraft with respect to
matters involving the ownership and operation of the Aircraft by the Owner
Trustee in the event that the Owner Trustee becomes the owner of the
Aircraft or is deemed to be the owner of the Aircraft pursuant to
Applicable Law so as to assure that (i) the Aircraft shall be controlled
with respect to such matters by a United States Citizen, (ii) the Owner
Participant shall have no power to influence or control the exercise of
the Owner Trustee's authority with respect to such matters and (iii) the
Owner Trustee shall be able to give the affidavit required by Section
47.7(c)(2)(iii) of the Federal Aviation Regulations, 14 C.F.R.
47.7(c)(2)(iii). Section 2.03 shall be construed in furtherance of the
foregoing purpose.]*
ARTICLE III
ACCEPTANCE AND DELIVERY OF AIRCRAFT; ISSUANCE OF
LOAN CERTIFICATES; LEASE OF AIRCRAFT; REPLACEMENT
Section 3.01. Authorization. (a) The Owner Participant hereby
authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for
the benefit of the Owner Participant that, on the Delivery Date it will, subject
to due compliance with the terms of Section 3.02 hereof:
(i) authorize a representative or representatives of the Owner
Trustee to accept delivery of the Aircraft pursuant to the
Participation Agreement;
(ii) execute and deliver each of the Operative Agreements to
which the Owner Trustee is to be a party;
(iii) purchase the Aircraft pursuant to the Participation
Agreement;
(iv) pay an amount equal to Lessor's Cost to, or at the
direction of, the Lessee pursuant to the Participation Agreement in
consideration of the sale of the Aircraft to the Owner Trustee
thereunder;
----------
* Section 2.03 to be included only if Owner Participant is not a U.S.
citizen.
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(v) issue to the Loan Participants one or more Loan
Certificates in respect of the Aircraft in the amounts and otherwise
as provided in the Participation Agreement and the Trust Indenture;
(vi) execute and deliver the financing statements contemplated
by Sections 3.01(m) and (n) of the Participation Agreement;
(vii) make application to the FAA for registration of the
Aircraft in the name of the Owner Trustee;
(viii) take such other action as may reasonably be required of
the Owner Trustee hereunder or under the Participation Agreement,
the Trust Indenture or the Lease to effectuate the transactions
contemplated thereby; and
(ix) execute and deliver all such other instruments, documents
or certificates and take all such other actions in accordance with
the directions of the Owner Participant, as the Owner Participant
may reasonably deem necessary or advisable in connection with the
transactions contemplated hereby and by the other Operative
Agreements.
(b) The Owner Participant hereby authorizes and directs the Owner
Trustee to, and the Owner Trustee agrees for the benefit of the Owner
Participant that it will:
(i) immediately after the delivery of the Aircraft to the
Owner Trustee, cause the Aircraft to be leased to Lessee under the
Lease; and
(ii) execute and deliver a Lease Supplement and an Indenture
Supplement, in each case covering the Aircraft.
Section 3.02. Conditions Precedent. The right and obligation of the
Owner Trustee to take the action required by Section 3.01 hereof shall be
subject to the following conditions precedent:
(a) the Owner Participant shall have made the full amount of its
Commitment with respect to the Aircraft available to the Owner Trustee, in
immediately available funds, in accordance with Section 2.01(c) of the
Participation Agreement; and
(b) the terms and conditions of Section 3.01 of the Participation
Agreement shall have been waived by the Owner Participant or complied with
in a manner satisfactory to the Owner Participant.
Section 3.03. Postponement of Delivery Date. The Owner Trustee,
without necessity of further instructions from the Owner Participant, is hereby
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authorized and directed by the Owner Participant to take all action specified in
Section 2.01(a) of the Participation Agreement as action to be taken by the
Owner Trustee.
Section 3.04. Authorization in Respect of a Replacement Airframe or
Replacement Engines. The Owner Trustee agrees for the benefit of the Owner
Participant that, upon the receipt by a Responsible Officer of Owner Trustee of
an authorization and direction from the Owner Participant, it will, in the event
of a Replacement Airframe or Replacement Engines, if any, being substituted
pursuant to Section 8(a)(i) of the Lease, or a Replacement Engine being
substituted pursuant to Section 7(e) of the Lease, subject to due compliance
with the terms of Sections 8(d) and 7(e) of the Lease, as the case may be:
(a) to the extent not previously accomplished by a prior
authorization, authorize a representative or representatives of the Owner
Trustee to accept delivery of the Replacement Airframe or Replacement
Engines, if any, or the Replacement Engine;
(b) accept from Lessee or other vendor of the Replacement Airframe
or Replacement Engines, if any, or the Replacement Engine, a xxxx of sale
or bills of sale (if tendered) and the invoice, if any, with respect to
the Replacement Airframe and Replacement Engines, if any, or the
Replacement Engine being furnished pursuant to Section 8(a)(ii) or 7(e) of
the Lease;
(c) in the case of a Replacement Airframe, make application to the
FAA (or the Aeronautical Authority of any jurisdiction other than the
United States of America in which the Replacement Airframe is then
registered in accordance with the terms of the Lease) for registration in
the name of the Owner Trustee of the Aircraft of which such Replacement
Airframe is a part;
(d) execute and deliver a Lease Supplement and an Indenture
Supplement covering (i) the Aircraft of which such Replacement Airframe is
part of and, (ii) such Replacement Engine, as the case may be;
(e) transfer its interest in (without recourse except as to
obligations in respect of Lessor's Liens) and to the Airframe and Engines
(if any) or the Engine being replaced to or at the direction of Lessee;
(f) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the Airframe or
Engines (or engines) being replaced from the Lien created under the Trust
Indenture and release the Assignment of Warranties (solely with respect to
such replaced Airframe or Engines, if any) from the assignment and pledge
under the Trust Indenture; and
(g) take such further action as may be contemplated by Sections 8(d)
or 7(e) of the Lease, as the case may be.
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Section 3.05. Trust Agreement Remaining in Full Force and Effect. In
the event of the substitution of a Replacement Airframe for the Airframe or the
substitution of a Replacement Engine for any Engine or engine all provisions of
this Trust Agreement relating to such replaced Airframe or Engine or engine
shall be applicable to such Replacement Airframe or Replacement Engine, with the
same force and effect as if such Replacement Airframe or Replacement Engine were
the same airframe, engine or propeller as the Airframe or Engine being replaced
but for the Event of Loss with respect to such Airframe or Engine.
Section 3.06. Authorization in Respect of Return of an Engine. The
Owner Trustee agrees for the benefit of the Owner Participant that, upon the
receipt of an authorization and direction from the Owner Participant, it will,
in the event of an engine being transferred to the Owner Trustee pursuant to
Section 12(b) of the Lease, subject to due compliance with the terms of such
Section 12(b):
(a) accept from Lessee or other vendor the xxxx of sale contemplated
by such Section 12(b) with respect to such engine being transferred to the
Owner Trustee;
(b) transfer its right, title and interest in (without recourse or
warranty except a warranty against Lessor's Liens) and to an Engine to or
at the direction of Lessee as contemplated by such Section 12(b); and
(c) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the Engine being
transferred to Lessee pursuant to such Section 12(b) from the Lien of the
Trust Indenture and to release Assignment of Warranties (solely with
respect to such Engine) from the assignment and pledge under the Trust
Indenture.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
Section 4.01. Distribution of Payments. (a) Payments to the
Indenture Trustee. Until the Trust Indenture shall have been terminated pursuant
to Section 14.01 thereof or until the Aircraft shall have been released from the
Lien created under the Trust Indenture pursuant to the terms thereof, all Basic
Rent, Supplemental Rent, insurance proceeds and requisition, indemnity or other
payments of any kind included in the Trust Estate (it being understood that
Excepted Property is not part of the Trust Estate) shall be payable directly to
the Indenture Trustee (and if any of the same are received by the Owner Trustee
shall upon receipt be paid over to the Indenture Trustee without deduction,
set-off or adjustment of any kind) for distribution in accordance with the
provisions of Article V of the Trust Indenture.
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(b) Payments to the Owner Trustee; Other Parties. Any payment of the
type required to be paid to the Indenture Trustee referred to in paragraph (a)
of this Section 4.01 received by the Owner Trustee pursuant to the provisions of
Article V of the Trust Indenture and any other amounts received as part of the
Trust Estate and for the application or distribution of which no provision is
made herein, shall be distributed forthwith upon receipt by the Owner Trustee in
the following order of priority: first, so much of such payment as shall be
required to pay or reimburse the Owner Trustee for any fees or expenses not
otherwise paid or reimbursed as to which the Owner Trustee is entitled to be so
paid or reimbursed pursuant to the provisions hereof or of the Trust Indenture
shall be retained by the Owner Trustee; and second, the balance, if any, shall
be paid to the Owner Participant.
(c) Excepted Property. Any Excepted Property received by the Owner
Trustee shall be paid by the Owner Trustee to the Person to whom such Excepted
Property is payable under the provisions of the Tax Indemnity Agreement, the
Participation Agreement or the Lease.
Section 4.02. Method of Payments. The Owner Trustee shall make
distributions or cause distributions to be made to (i) the Owner Participant
pursuant to this Article IV by transferring by wire transfer in immediately
available funds the amount to be distributed to such account or accounts of the
Owner Participant as it may designate from time to time by written notice to the
Owner Trustee (and the Owner Trustee shall use reasonable efforts to cause such
funds to be transferred by wire transfer on the same day as received, but in any
case not later than the next succeeding Business Day), and (ii) the Indenture
Trustee pursuant to this Article IV by paying the amount to be distributed to
the Indenture Trustee in the manner specified in the Trust Indenture; provided,
however, that the Owner Trustee shall use its best efforts to invest overnight,
for the benefit of the Owner Participant, in investments that would be permitted
by Section 15 of the Lease (but only to the extent such investments are
available and, if such investments are not available, then in such other
investments available to the Owner Trustee which, after consultation with the
Owner Participant, the Owner Participant shall direct), all funds not
transferred by the Owner Trustee by wire transfer on the same day as they were
received. Notwithstanding the foregoing but subject always to the provisions of
and Lien created by the Trust Indenture, the Owner Trustee will, if so requested
by the Owner Participant by written notice, pay any and all amounts payable by
the Owner Trustee hereunder to the Owner Participant either (i) by crediting, or
causing the Indenture Trustee to credit, such amount or amounts to an account or
accounts maintained by the Owner Participant with the Owner Trustee or the
Indenture Trustee, as the case may be, in immediately available funds, or (ii)
by mailing, or causing the Indenture Trustee to mail, an official bank check or
checks in such amount or amounts payable to the Owner Participant at such
address as the Owner Participant shall have designated in writing to the Owner
Trustee.
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ARTICLE V
DUTIES OF THE OWNER TRUSTEE
Section 5.01. Notice of Event of Default. If the Owner Trustee shall
have knowledge of an Event of Default or an Indenture Event of Default, the
Owner Trustee shall give to the Owner Participant and the Lessee prompt
telephonic or telecopied notice thereof followed by prompt confirmation thereof
by certified mail, postage prepaid. Subject to the terms of Section 5.03, the
Owner Trustee shall take such action or shall refrain from taking such action,
not inconsistent with the provisions of the Operative Agreements, with respect
to such Event of Default or Indenture Event of Default as the Owner Trustee
shall be directed in writing by the Owner Participant. For all purposes of this
Trust Agreement and the Lease, the Owner Trustee shall not be deemed to have
knowledge of an Event of Default or an Indenture Event of Default unless
notified in writing thereof in the manner and at the address set forth in
Section 11.05 or unless an officer in the Corporate Trust Administration
Department who has responsibility for, or familiarity with, the transactions
contemplated hereunder, under the Participation Agreement and under the Trust
Indenture or any Vice President in the Corporate Trust Administration Department
of the Owner Trustee has actual knowledge thereof.
Section 5.02. Action Upon Instructions. Subject in all respects to
the terms of Sections 5.01 and 5.03 and to the terms of the other Operative
Agreements, upon the written instructions at any time and from time to time of
the Owner Participant, the Owner Trustee will take such of the following actions
as may be specified in such instructions: (i) give such notice or direction or
exercise such right, remedy or power hereunder or under any of the Operative
Agreements to which the Owner Trustee is a party, or in respect of all or any
part of the Trust Estate, as shall be specified in such instructions; (ii) take
such action to preserve or protect the Trust Estate (including the discharge of
any Liens or encumbrances) as may be specified in such instructions; (iii)
approve as satisfactory to it all matters required by the terms of the Lease to
be satisfactory to the Owner Trustee, it being understood that without written
instructions of the Owner Participant, the Owner Trustee shall not approve any
such matter as satisfactory to it; (iv) after the expiration or earlier
termination of the Lease, convey all of the Owner Trustee's right, title and
interest in and to the Aircraft for such amount, on such terms and to such
purchaser or purchasers as shall be designated in such instructions, or lease
the Aircraft on such terms as shall be set forth in such instructions or deliver
the Aircraft to the Owner Participant in accordance with such instructions; and
(v) take or refrain from taking such other action or actions as may be specified
in such instructions. In the event that the Owner Trustee is unsure of the
application of any provision of this Trust Agreement or any other agreement
relating to the transactions contemplated hereby, the Owner Trustee may request
and rely upon instructions of the Owner Participant.
Section 5.03. Indemnification. The Owner Trustee shall not be
required to take or refrain from taking any action under Section 5.01 or 5.02
unless the Owner
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Trustee shall have been indemnified by the Owner Participant, in manner and form
satisfactory to the Owner Trustee, against any liability, cost or expense
(including reasonable counsel fees and disbursements) which may be incurred in
connection therewith; and, if the Owner Participant shall have directed the
Owner Trustee to take or refrain from taking any such action, the Owner
Participant agrees to furnish such indemnity as shall be required and in
addition to pay the reasonable fees and charges of the Owner Trustee for the
services performed or to be performed by it pursuant to such direction. The
Owner Trustee shall not be required to take any action under Section 5.01 or
5.02 if the Owner Trustee shall reasonably determine, or shall have been advised
by counsel, that such action is contrary to the terms of any of the Operative
Agreements to which the Owner Trustee is a party, or is otherwise contrary to
Applicable Law.
Section 5.04. No Duties Except as Specified in Trust Agreement or
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
control, use, sell, dispose of or otherwise deal with the Aircraft or any other
part of the Trust Estate, or otherwise to take or refrain from taking any action
under, or in connection with any of the Operative Agreements to which the Owner
Trustee is a party, except as expressly required by the terms of any of the
Operative Agreements to which the Owner Trustee is a party, or (to the extent
not inconsistent with the provisions of the Trust Indenture) as expressly
provided by the terms hereof or in written instructions from the Owner
Participant received pursuant to the terms of Section 5.01 or 5.02, and no
implied duties or obligations shall be read into this Trust Agreement or any of
the Operative Agreements to which the Owner Trustee is a party against the Owner
Trustee. The Owner Trustee nevertheless agrees that it will, in its individual
capacity and at its own cost and expense (but without any right of indemnity in
respect of any such cost or expense under Section 7.01) promptly take such
action as may be necessary duly to discharge and satisfy in full (i) all
Lessor's Liens attributable to the Owner Trustee in its individual capacity,
(ii) any Liens (other than Lessor's Liens attributable to it in its individual
capacity) created as a result of its breach of any of its obligations under this
Trust Agreement (subject to the limitations on the liability of the Owner
Trustee in its individual capacity set forth in Section 6.01) on any part of the
Trust Estate, or on any properties of the Owner Trustee assigned, pledged or
mortgaged as part of the Trust Estate, which arise from acts of the Owner
Trustee in its individual capacity, except the Lien created under the Trust
Indenture, the rights of Lessee under the Lease and the rights of the Owner
Participant hereunder, and (iii) any other Liens or encumbrances attributable to
the Owner Trustee in its individual capacity on any part of the Trust Estate
which result from claims against the Owner Trustee in its individual capacity
unrelated to the ownership of the Aircraft, the administration of the Trust
Estate or the transactions contemplated by the Operative Agreements.
Section 5.05. No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall have no power or authority to, and the
Owner Trustee agrees that it will not, manage, control, use, sell, dispose of or
otherwise deal with the Aircraft or any other part of the Trust Estate except
(i) as expressly required
-10-
by the terms of any of the Operative Agreements to which the Owner Trustee is a
party, (ii) as expressly provided by the terms hereof, or (iii) as expressly
provided in written instructions from the Owner Participant pursuant to Section
5.01 or 5.02, but subject always to the provisions of the Lien created by the
Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE
Section 6.01. Acceptance of Trusts and Duties. The Owner Trustee in
its individual capacity accepts the trusts hereby created and agrees to perform
the same but only upon the terms hereof applicable to it. The Owner Trustee in
its individual capacity also agrees to receive and disburse all monies received
by it constituting part of the Trust Estate upon the terms hereof. The Owner
Trustee, in its individual capacity, shall not be answerable or accountable
under any circumstances, except for (i) its own willful misconduct or gross
negligence, (ii) its performance of the terms of the last sentence of Section
5.04, (iii) its failure to use ordinary care in receiving or disbursing funds,
(iv) liabilities that may result from the inaccuracy of any representation or
warranty of the Owner Trustee in its individual capacity (or from the failure by
the Owner Trustee in its individual capacity to perform any covenant made in its
individual capacity) in Section 6.03 or in any of the Operative Agreements to
which the Owner Trustee is a party, and (v) taxes, fees or other charges on,
based on or measured by any fees, commissions or other compensation received by
the Owner Trustee as compensation for its services rendered as the Owner
Trustee; provided, however, that the failure to act or perform in the absence of
instructions after the Owner Trustee has requested instructions from the Owner
Participant pursuant to the last sentence of Section 5.02 shall not constitute
willful misconduct or gross negligence for purposes of clause (i) of this
Section 6.01.
Section 6.02. Absence of Certain Duties. Except in accordance with
written instructions furnished pursuant to Sections 5.01 and 5.02 and except as
provided in, and without limiting the generality of, Sections 5.04 and 5.05 and
the last sentence of Section 9.01(b), the Owner Trustee shall have no duty (i)
to see to any registration of the Aircraft or any recording or filing of the
Lease, this Trust Agreement, the Trust Indenture, any financing or continuation
statement or of any supplement to any thereof or to see to the maintenance of
any such registration, rerecording or refiling, except that the Owner Trustee
shall upon written request furnished by Lessee take such action as may be
required of the Owner Trustee to maintain the registration of the Aircraft in
the name of the Owner Trustee under the Act or, to the extent the Aircraft is
registered in a country other than the United States of America pursuant to
Section 4.02 of the Participation Agreement, other Applicable Law, and to the
extent that information for that purpose is supplied by Lessee pursuant to any
of the Operative Agreements, complete and timely submit any and all reports
relating to the Aircraft which may from time to time be required by the FAA or
any government or governmental authority having jurisdiction, (ii) to see to any
insurance
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on the Aircraft or to effect or maintain any such insurance, whether or not
Lessee shall be in default with respect thereto, (iii) to see to the payment or
discharge of any tax, assessment or other governmental charge or any Lien or
encumbrance of any kind owing with respect to, assessed or levied against any
part of the Trust Estate except as provided by Section 5.04 hereof or Section
5.03(b) of the Participation Agreement, (iv) to confirm or verify any financial
statements of Lessee or (v) to inspect the Aircraft or the books and records of
Lessee with respect to the Aircraft.
Section 6.03. No Representations or Warranties as to Certain
Matters. THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS THE OWNER TRUSTEE
DOES NOT MAKE AND SHALL NOT BE DEEMED TO HAVE MADE (a) ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE
AIRCRAFT, ANY ENGINE THEREOF, ABSENCE OF LATENT OR OTHER DEFECTS (WHETHER OR NOT
DISCOVERABLE) OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE
AIRCRAFT OR ANY ENGINE WHATSOEVER, except that the Owner Trustee in its
individual capacity warrants that on the Delivery Date the Owner Trustee shall
have received and shall hold whatever title to the Aircraft was conveyed to it
by Lessee free and clear of Lessor's Liens attributable to the Owner Trustee in
its individual capacity, shall be in compliance with the last sentence of
Section 5.04 hereof and that the Aircraft shall during the Lease Term be free of
Lessor's Liens attributable to it in its individual capacity, or (b) any
representation or warranty as to the validity, legality or enforceability of
this Trust Agreement or any other Operative Agreement to which the Owner Trustee
is a party, or any other document or instrument, or as to the correctness of any
statement contained in any thereof except to the extent that any such statement
is expressly made herein or therein as a representation by the Owner Trustee in
its individual capacity and except that the Owner Trustee in its individual
capacity hereby represents and warrants that this Trust Agreement has been, and
(assuming the due authorization, execution and delivery of the Trust Agreement
by the Owner Participant) the other Operative Agreements to which the Owner
Trustee is a party have been (or at the time of execution and delivery of any
such instrument by the Owner Trustee hereunder or pursuant to the terms of the
Participation Agreement that such an instrument will be) duly executed and
delivered by one of its officers who is or will be, as the case may be, duly
authorized to execute and deliver such instruments on behalf of the Owner
Trustee and that this Trust Agreement has been duly authorized, executed and
delivered by the institution acting as the Owner Trustee and constitutes the
legal, valid and binding obligation of such institution enforceable against it
in accordance with its terms, except as such terms may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general principles of equity, regardless of
whether considered in a proceeding in equity or at law.
Section 6.04. No Segregation of Monies Required; Investment Thereof.
Monies received by the Owner Trustee hereunder need not be segregated in any
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manner except to the extent required by Applicable Law, and may be deposited
under such general conditions as may be prescribed by Applicable Law, and shall
be invested as provided in Section 4.02 hereof or Section 15 of the Lease.
Section 6.05. Reliance Upon Certificates, Counsel and Agents. The
Owner Trustee shall incur no liability to anyone in acting in reliance upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper reasonably believed by it to be
genuine and reasonably believed by it to be signed by the proper party or
parties. Unless other evidence in respect thereof is specifically prescribed
herein, any request, direction, order or demand of the Owner Participant, Lessee
or the Indenture Trustee mentioned herein or in any of the other Operative
Agreements to which the Owner Trustee is a party shall be sufficiently evidenced
by written instruments signed by a person purporting to be an officer of the
Owner Participant, Lessee or the Indenture Trustee, as the case may be. The
Owner Trustee may accept a copy of a resolution of the Board of Directors of
Lessee, the Owner Participant or the Indenture Trustee, as the case may be,
certified by the Secretary or an Assistant Secretary of Lessee, the Owner
Participant or the Indenture Trustee, as the case may be, as duly adopted and in
full force and effect, as conclusive evidence that such resolution has been duly
adopted by said Board and that the same is in full force and effect. As to any
fact or matter the manner of ascertainment of which is not specifically
described herein, the Owner Trustee may for all purposes hereof rely on a
certificate signed by an officer of Lessee, the Owner Participant or the
Indenture Trustee, as the case may be, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon.
In the administration of the trusts hereunder, the Owner Trustee may
exercise its powers and perform its duties hereunder directly or through agents
or attorneys and the Owner Trustee shall not be liable for the default or
misconduct of any agents or attorneys selected by it with reasonable care. In
the administration of the trusts hereunder, the Owner Trustee may consult with
counsel, accountants and other skilled persons and the Owner Trustee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion of any such counsel, accountants or other
skilled persons selected by it with reasonable care.
Section 6.06. Not Acting in Individual Capacity. In acting
hereunder, the Owner Trustee acts solely as trustee and not in its individual
capacity except as otherwise expressly provided herein; and, except as may be
otherwise expressly provided in this Trust Agreement, the Lease, the
Participation Agreement or the Trust Indenture, all Persons having any claim
against the Owner Trustee by reason of the transactions contemplated hereby
shall look only to the Trust Estate for payment or satisfaction thereof.
Section 6.07. Fees; Compensation. Except as provided in Section
5.03, 6.08 or 7.01, the Owner Trustee agrees that it shall have no right against
the Owner Participant or the Trust Estate for any fee as compensation for its
services hereunder.
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Section 6.08. Tax Returns. The Owner Trustee shall be responsible
for the keeping of all appropriate books and records relating to the receipt and
disbursement by it of all monies under this Trust Agreement or any agreement
contemplated hereby. The Owner Trustee shall be responsible for causing to be
prepared and filed, at Lessee's expense, all income tax returns requested to be
filed by the Owner Participant and for causing to be prepared all income tax
returns required to be filed with respect to the trust created hereby as
requested by the Owner Participant and shall execute and file such returns.
ARTICLE VII
INDEMNIFICATION OF THE OWNER TRUSTEE
BY THE OWNER PARTICIPANT
Section 7.01. The Owner Participant to Indemnify the Owner Trustee.
The Owner Participant hereby agrees, whether or not any of the transactions
contemplated hereby shall be consummated, to assume liability for, and does
hereby indemnify, protect, save, defend and hold harmless the Owner Trustee in
its individual capacity, and its successors, assigns (but not security assigns),
directors, officers, representatives, agents, employees and servants, from and
against any and all liabilities, obligations, losses, damages, penalties, taxes
(excluding any taxes payable by the Owner Trustee on or measured by any
compensation received by the Owner Trustee for its services hereunder), claims,
actions, suits, costs, expenses or disbursements (including, without limitation,
reasonable legal fees) and expenses of any kind and nature whatsoever which may
be imposed on, incurred by or asserted against the Owner Trustee in its
individual capacity (whether or not also indemnified against by Lessee under the
Lease or under the Participation Agreement or also indemnified against by any
other Person) in any way relating to or arising out of this Trust Agreement or
any of the other Operative Agreements or the enforcement of any of the terms of
any thereof, or in any way relating to or arising out of the manufacture,
purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease,
possession, use, operation, condition, sale, return or other disposition of the
Airframe, any Engine, any Propeller or any Part of the foregoing (including,
without limitation, latent and other defects, whether or not discoverable, and
any claim for patent, trademark or copyright infringement), or in any way
relating to or arising out of the administration of the Trust Estate or the
action or inaction of the Owner Trustee hereunder, except (a) in the case of
willful misconduct or gross negligence on the part of the Owner Trustee either
as trustee or in its individual capacity in the performance or nonperformance of
its duties hereunder or (b) those resulting from the inaccuracy of any
representation or warranty of the Owner Trustee in its individual capacity (or
from the failure of the Owner Trustee in its individual capacity to perform any
covenant) in Section 6.03, or in any of the Operative Agreements, or (c) those
arising or resulting from any of the matters described in the last sentence of
Section 6.01, or (d) those resulting from its failure to perform the terms of
the last sentence of Section 5.04 hereof or from its failure to use ordinary
care in the receipt and disbursement of funds. The indemnities
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contained in this Section 7.01 extend to the Owner Trustee only in its
individual capacity and shall not be construed as indemnities of the Indenture
Estate or the Trust Estate. The indemnities contained in this Section 7.01 shall
survive the termination of this Trust Agreement and the resignation or removal
of the Owner Trustee. In addition, if necessary, the Owner Trustee shall be
entitled to indemnification from the Trust Estate, subject however to the
provisions of Section 4.01 hereof and the Lien created under the Trust
Indenture, for any liability, obligation, loss, damage, penalty, tax, claim,
action, suit, cost, expense or disbursement indemnified against pursuant to this
Section 7.01 to the extent not reimbursed by Lessee, the Owner Participant or
others, but without releasing any of them from their respective agreements of
reimbursement.
ARTICLE VIII
[RESERVED]
ARTICLE IX
SUCCESSOR OWNER TRUSTEES; CO-TRUSTEES
Section 9.01. Resignation of the Owner Trustee; Appointment of
Successor. (a) Resignation or Removal. The Owner Trustee or any successor Owner
Trustee may resign at any time without cause by giving at least 60 days prior
written notice to the Owner Participant, the Indenture Trustee and Lessee, such
resignation to be effective upon the acceptance of appointment by the successor
Owner Trustee under Section 9.01(b). In addition, the Owner Participant may at
any time remove the Owner Trustee, or revoke the trusts created by this Trust
Agreement, in either case with or without cause by a notice in writing delivered
to the Owner Trustee, the Indenture Trustee and Lessee. Any such removal shall
be effective upon the acceptance of appointment by the successor Owner Trustee
under Section 9.01(b). In the case of the resignation or removal of the Owner
Trustee, the Owner Participant may appoint a successor Owner Trustee by an
instrument in writing. If a successor Owner Trustee shall not have been
appointed within 30 days after such notice of resignation or removal, the Owner
Trustee or the Indenture Trustee may apply to any court of competent
jurisdiction to appoint a successor Owner Trustee to act until such time, if
any, as a successor shall have been appointed as above provided. Any successor
Owner Trustee so appointed by such court shall immediately and without further
act be superseded by any successor Owner Trustee appointed as above provided
within one year from the date of the appointment by such court.
(b) Execution and Delivery of Documents, etc. Any successor Owner
Trustee, however appointed, shall execute and deliver to the predecessor Owner
Trustee an instrument accepting such appointment, and thereupon such successor
Owner Trustee, without further act, shall become vested with all the estates,
properties, rights,
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powers, duties and trusts of the predecessor Owner Trustee in the trust
hereunder with like effect as if originally named the Owner Trustee herein; but
nevertheless, upon the written request of such successor Owner Trustee, such
predecessor Owner Trustee shall execute and deliver an instrument transferring
to such successor Owner Trustee upon the trusts herein expressed, all the
estates, properties, rights, powers and trusts of such predecessor Owner
Trustee, and such predecessor Owner Trustee shall duly assign, transfer, deliver
and pay over to such successor Owner Trustee all monies or other property then
held by such predecessor Owner Trustee upon the trusts herein expressed. Upon
the appointment of any successor Owner Trustee hereunder, the predecessor Owner
Trustee will complete, execute and deliver to the successor Owner Trustee such
documents as are necessary to cause registration of the Aircraft included in the
Trust Estate to be transferred upon the records of the FAA or other governmental
authority having jurisdiction, into the name of the successor Owner Trustee.
(c) Qualification. Any successor Owner Trustee, however appointed,
shall be a United States Citizen, shall be qualified to act as a trustee in
Delaware (if the trust created hereby is to remain in such state) and shall also
be a bank or trust company organized under the laws of the United States of
America or any state thereof having a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Owner Trustee hereunder upon reasonable
and customary terms.
(d) Merger, etc. Any corporation into which the Owner Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Owner
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Owner Trustee may be transferred, shall, subject
to the terms of Section 9.01(c), be the Owner Trustee hereunder without further
act.
Section 9.02. Co-Trustees and Separate Trustees. If at any time or
times it shall be necessary or prudent in order to conform to any Applicable Law
of any jurisdiction in which all or any part of the Trust Estate is located, or
the Owner Trustee shall be advised by counsel that it is so necessary or prudent
in the interest of the Owner Participant or the Owner Trustee, or the Owner
Trustee shall have been directed to do so by the Owner Participant, the Owner
Trustee and the Owner Participant shall execute and deliver an agreement
supplemental hereto and all other instruments and agreements necessary or proper
to constitute another bank or trust company or one or more Persons (any and all
of which shall be a United States Citizen) approved by the Owner Trustee and the
Owner Participant, either to act as co-trustee or co-trustees, jointly with the
Owner Trustee, or to act as separate trustee or trustees hereunder (any such
co-trustee or separate trustee being herein sometimes referred to as an
"additional trustee"). In the event (i) the Owner Participant shall not have
joined in the execution of such agreements supplemental hereto within ten days
after the receipt of a written request from the Owner Trustee so to do, or (ii)
an Event of Default or an Indenture Event of Default shall occur and be
continuing, the Owner
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Trustee may act under the foregoing provisions of this Section 9.02 without the
concurrence of the Owner Participant; and the Owner Participant hereby appoints
the Owner Trustee its agent and attorney-in-fact to act for it under the
foregoing provisions of this Section 9.02 in either of such contingencies.
Every additional trustee hereunder shall, to the extent permitted by
Applicable Law, be appointed and act, and the Owner Trustee and its successors
shall act, subject to the following provisions and conditions:
(a) all powers, duties, obligations and rights conferred upon the
Owner Trustee in respect of the custody, control and management of monies,
the Aircraft or documents authorized to be delivered hereunder or under
the Participation Agreement shall be exercised solely by the corporation
designated as the Owner Trustee in the first paragraph of this Trust
Agreement, or its successors as the Owner Trustee hereunder;
(b) all other rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee and any limitations thereon shall be
conferred or imposed upon and exercised or performed by the corporation
designated as the Owner Trustee in the first paragraph of this Trust
Agreement or its successors as the Owner Trustee, and such additional
trustee or trustees jointly, except to the extent that under any
Applicable Law of any jurisdiction in which any particular act or acts are
to be performed (including the holding of title to the Trust Estate), the
Owner Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations shall be
exercised and performed by such additional trustee or trustees;
(c) no power given to, or which it is provided hereby may be
exercised by, any such additional trustee or trustees shall be exercised
hereunder by such additional trustee or trustees, except jointly with, or
with the consent in writing of, the corporation designed as the Owner
Trustee in this Trust Agreement or its successor as the Owner Trustee,
anything herein contained to the contrary notwithstanding;
(d) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder;
(e) the Owner Participant, at any time, by an instrument in writing
may remove any such additional trustee. In the event that the Owner
Participant shall not have joined in the execution of any such instrument
within ten days after the receipt of a written request from the Owner
Trustee so to do, the Owner Trustee shall have the power to remove any
such additional trustee without the concurrence of the Owner Participant;
and the Owner Participant hereby appoints the Owner Trustee its agent and
attorney-in-fact to act for it in such connection in such contingency; and
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(f) no appointing of, or action by, any additional trustee will
relieve the Owner Trustee of any of its obligations under, or otherwise
affect any of the terms of the Trust Indenture or affect the interests of
the Indenture Trustee or the holders of the Loan Certificates in the Trust
Estate.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT
AND OTHER DOCUMENTS
Section 10.01. Supplements and Amendments. (a) Supplements and
Amendments. At any time and from time to time, upon the written request of the
Owner Participant, (i) the Owner Trustee, together with the Owner Participant,
shall execute a supplement to this Trust Agreement for the purpose of adding
provisions to, or changing or eliminating provisions of, this Trust Agreement
(except Section 11.11) as specified in such request, and (ii) the Owner Trustee
shall, subject to compliance with the applicable provisions of Section 13.02 of
the Trust Indenture, enter into such written amendment of or supplement to any
other Operative Agreement to which the Owner Trustee is a party as the Indenture
Trustee and Lessee may agree to and as may be specified in such request, or
execute and deliver such written waiver or modification of or consent under the
terms of any such Operative Agreement as Lessee and the Indenture Trustee may
agree to and as may be specified in such request. Notwithstanding the foregoing,
except to the extent permitted by Section 14.01 of the Participation Agreement,
no supplement to this Trust Agreement or waiver or modification to the terms
hereof shall be permitted.
(b) Delivery of Amendments and Supplements to Certain Parties. Until
the Trust Indenture shall have been terminated pursuant to Section 10(a) thereof
or the Aircraft shall have been released from the Indenture Estate, a signed
copy of each amendment or supplement to the Trust Agreement shall be delivered
by the Owner Trustee to the Indenture Trustee without in any way affecting the
Trust Indenture or the Loan Certificates and without imposing any duty on the
Indenture Trustee with respect to such amendment or supplement.
Section 10.02. Discretion as to Execution of Documents. If in the
opinion of the Owner Trustee any document required to be executed pursuant to
the terms of Section 10.01 adversely affects any right, duty, immunity or
indemnity in favor of the Owner Trustee hereunder or under any other Operative
Agreement to which the Owner Trustee is a party, the Owner Trustee may in its
discretion decline to execute such document.
Section 10.03. Absence of Requirements as to Form. It shall not be
necessary for any written request furnished pursuant to Section 10.01 to specify
the particular form of the proposed documents to be executed pursuant to such
Section, but it shall be sufficient if such request shall indicate the substance
thereof.
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Section 10.04. Distribution of Documents. Promptly after the
execution by the Owner Trustee of any document entered into pursuant to Section
10.01, the Owner Trustee shall mail, by certified mail, postage prepaid, a
conformed copy thereof to the Owner Participant, but the failure of the Owner
Trustee to mail such conformed copy shall not impair or affect the validity of
such document.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Termination of Trust Agreement. This Trust Agreement
and the trusts created hereby shall terminate and this Trust Agreement shall be
of no further force or effect upon the earliest of (a) the later of (x) the
termination of the Trust Indenture pursuant to Section 14.01 thereof and the
sale or other final disposition by the Owner Trustee of all property
constituting part of the Trust Estate and the final distribution by the Owner
Trustee of all monies or other property or proceeds constituting part of the
Trust Estate in accordance with Article IV hereof, provided that at such time
Lessee shall have fully complied with all of the terms of the Participation
Agreement and the Lease, and (y) the expiration or termination of the Lease in
accordance with its terms or (b) 110 years after the earlier execution of this
Trust Agreement by either party hereto (or without limiting the generality of
the foregoing, if legislation shall become effective providing for the validity
or permitting the effective grant of such rights, privileges and options for a
period in gross, exceeding the period for which such rights, privileges and
options are hereinabove stated to extend and be valid), then such rights,
privileges or options shall not terminate as aforesaid but shall extend to and
continue in effect, but only if such non-termination and extension shall then be
valid under Applicable Law until such time as the same shall under Applicable
Law cease to be valid, whereupon all monies or other property or proceeds
constituting part of the Trust Estate shall be distributed in accordance with
the terms of Article IV hereof, otherwise this Trust Agreement and the trusts
created hereby shall continue in full force and effect in accordance with the
terms hereof.
Section 11.02. The Owner Participant Has No Legal Title in Trust
Estate. The Owner Participant does not have legal title to any part of the Trust
Estate. No transfer, by operation of law or otherwise, of any right, title and
interest of the Owner Participant in and to the Trust Estate hereunder shall
operate to terminate this Trust Agreement or the trusts hereunder or entitle any
successors or transferees of the Owner Participant to an accounting or to the
transfer of legal title to any part of the Trust Estate.
Section 11.03. Assignment, Sale, etc., of Aircraft. Any assignment,
sale, transfer or other conveyance of the Aircraft, any Engine, any Propeller or
any interest therein by the Owner Trustee made pursuant to the terms hereof or
of the Lease or the Participation Agreement shall bind the Owner Participant and
shall be effective to transfer or convey all right, title and interest of the
Owner Trustee and the Owner
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Participant in and to the Aircraft, such Engine or interest therein. No
purchaser or other grantee shall be required to inquire as to the authorization,
necessity, expediency or regularity of such assignment, sale, transfer or
conveyance or as to the application of any sale or other proceeds with respect
thereto by the Owner Trustee.
Section 11.04. Trust Agreement for Benefit of Certain Parties Only.
Except for the terms of Section 4.01, Articles V and IX, Sections 10.01, 11.01
and 11.03 hereof, nothing herein, whether express or implied, shall be construed
to give any Person other than the Owner Trustee and the Owner Participant any
legal or equitable right, remedy or claim under or in respect of this Trust
Agreement; but this Trust Agreement shall be held to be for the sole and
exclusive benefit of the Owner Trustee and the Owner Participant.
Section 11.05. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be given in the manner set
forth in Section 24(a) of the Participation Agreement.
Section 11.06. Severability. Any provision hereof which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 11.07. Waivers, etc. No term or provision hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing entered into in compliance with the terms of Article X hereof; and any
waiver of the terms hereof shall be effective only in the specified instance and
for the specific purpose given.
Section 11.08. Counterparts. This Trust Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 11.09. Binding Effect, etc. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee and its successors and permitted assigns, and the Owner Participant, its
successors and, to the extent permitted by Article VIII, its permitted assigns.
Any request, notice, direction, consent, waiver or other instrument or action by
the Owner Participant shall bind its successors and permitted assigns.
Section 11.10. Headings; References. The headings of the various
Articles and Sections herein are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
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Section 11.11. Governing Law. This Trust Agreement shall in all
respects be governed by, and construed in accordance with, the laws of the State
of Delaware, including all matters of construction, validity and performance.
Section 11.12. Administration of Trust. The principal place of
administration of the trust created by this Agreement shall be in the State of
Delaware.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
[OWNER PARTICIPANT]
By __________________________
Name:
Title:
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
By __________________________
Name:
Title:
-22-
Exhibit B
DELIVERY NOTICE
Dated as of [________________]
To each of the addresses listed
in Schedule A hereto
Re: Delivery Notice in accordance with Note Purchase Agreement
referred to below
Gentlemen:
Reference is made to the Note Purchase Agreement, dated as of August __,
1998 among Midway Airlines Corporation (the "Company"), The First National Bank
of Maryland, as Pass Through Trustee under each of the Pass Through Trust
Agreements (as defined therein) (the "Pass Through Trustee"), The First National
Bank of Maryland, as Subordination Agent (the "Subordination Agent"), First
Union Trust Company, National Association, as Escrow Agent (the "Escrow Agent")
and The First National Bank of Maryland, as Paying Agent (the "Paying Agent")
(as in effect from time to time, the "Note Purchase Agreement"). Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
set forth in the Note Purchase Agreement or, to the extent not defined therein,
the Intercreditor Agreement.
Pursuant to Sections 1(b) of the Note Purchase Agreement, the undersigned
hereby notifies you, in respect of the Bombardier Regional Jet Series 200ER
aircraft with manufacturer's serial number [ ] (the "Aircraft"), of the
following:
(1) The Company has elected to treat the Aircraft as [a Leased Aircraft] [an
Owned Aircraft];
(2) The Scheduled Delivery Date of the Aircraft is [ ];
(3) The Funding Date for the Aircraft shall be [ ]; and
(4) The aggregate amount of each series of Equipment Notes to be issued, and
purchased by the respective Pass Through Trustees, on the Funding Date, in
connection with the financing of such Aircraft is as follows:
(a) the Class A Trustee shall purchase Series A Equipment Notes in the
amount of $[ ];
(b) the Class B Trustee shall purchase Series B Equipment Notes in the
amount of $[ ];
(c) the Class C Trustee shall purchase Series C Equipment Notes in the
amount of $[ ]; and
(d) the Class D Trustee shall purchase Series D Equipment Notes in the
amount of $[ ].
The Company hereby instructs the Class A Trustee to (i) execute a
Withdrawal Certificate in the form of Annex A hereto dated as of [ ] and
attach thereto a Notice of Purchase Withdrawal dated such date completed as set
forth on Exhibit A hereto and (ii) deliver such Withdrawal Certificate and
Notice of Purchase Withdrawal to the applicable Escrow Agent.
The Company hereby instructs the Class B Trustee to (i) execute a
Withdrawal Certificate in the form of Annex A hereto dated as of [ ] and
attached thereto a Notice of Purchase Withdrawal dated such date completed as
set forth on Exhibit B hereto and (ii) deliver such Withdrawal Certificate and
Notice of Purchase Withdrawal to the applicable Escrow Agent.
The Company hereby instructs the Class C Trustee to (i) execute a
Withdrawal Certificate in the form of Annex A hereto dated as of [ ] and
attach thereto a Notice of Purchase Withdrawal dated such date completed as set
forth on Exhibit C hereto and (ii) deliver such Withdrawal Certificate and
Notice of Purchase Withdrawal to the applicable Escrow Agent.
The Company hereby instructs the Class D Trustee to (i) execute a
Withdrawal Certificate in the form of Annex A hereto dated as of [ ] and
attach thereto a Notice of Purchase Withdrawal dated such date completed as set
forth on Exhibit D hereto and (ii) deliver such Withdrawal Certificate and
Notice of Purchase Withdrawal to the applicable Escrow Agent.
The Company hereby instructs each Pass Through Trustee to (i) purchase
Equipment Notes of a series and in an amount set forth opposite such Pass
Through Trustee in clause (4) above with a portion of the proceeds of the
withdrawals of Deposits referred to in the applicable Notice of Purchase
Withdrawal referred to above and (ii) re-deposit with the Depositary the excess,
if any, of the amount so withdrawn over the purchase price of such Equipment
Notes.
The Company hereby instructs each Pass Through Trustee to (a) enter into
the Participation Agreement [N ML] dated as of [ ] among the Company, [as
Lessee,]* the Subordination Agent, the Pass Through Trustee, The First National
Bank of Maryland, as Indenture Trustee, [First Union Trust Company, National
Association, as Owner Trustee and [ ], as Owner Participant,]* (b) perform
its obligations thereunder and (c) deliver such certificates, documents and
legal opinions relating to such Pass Through Trustee as required thereby.
[The Company hereby certifies that the Owner Participant with respect to
the Aircraft (A) is not an Affiliate of the Company and (B) based on the
representations of such Owner Participant, is either a Qualified Owner
Participant or a person whose obligations under the Operative Agreements (as
defined in the Participation Agreement) to which the Owner Participant is a
party are guaranteed by a Qualified Owner Participant.]*
Very truly yours,
Midway Airlines Corporation
By:__________________________________
Name:
Title:
----------
* Only to be included for Leased Aircraft
SCHEDULE A
The First National Bank of Maryland, as
Pass Through Trustee, Subordination
Agent and Paying Agent
00 Xxxxx Xxxxxxx Xxxxxx
Mail Code 101-591
Baltimore, Maryland
Attention: Corporate Trust Department
Facsimile: (000) 000-0000
First Union Trust Company, National Association
One Xxxxxx Square
000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxxxxx 00000
Attention: Corporate Trust Administration
Facsimile: (000) 000-0000
Standard & Poor's Ratings Service
00 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Facsimile: (000) 000-0000
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Facsimile: (000) 000-0000
Annex A
WITHDRAWAL CERTIFICATE
(Class ____)
First Union Trust Company, National Association
as Escrow Agent
Ladies and Gentlemen:
Reference is made to the Escrow and Paying Agent Agreement, dated as
of August 13, 1998 (the "Agreement"). We hereby certify to you that the
conditions to the obligations of the undersigned to execute a Participation
Agreement pursuant to the Note Purchase Agreement have been satisfied. Pursuant
to Section 1.02(c) of the Agreement, please execute the attached Notice of
Withdrawal and immediately transmit by facsimile to the Depositary, at First
Union National Bank, Attention Xxxxx X. Xxxxxx, (facsimile no. 704-383-9139).
Capitalized terms used herein but not defined herein shall have the
meanings set forth in the Agreement.
Very truly yours,
THE FIRST NATIONAL BANK OF MARYLAND
not in its individual capacity by solely as
Pass Through Trustee
By _________________________________________
Name:
Title:
Dated: As of [ ]
Exhibit A
NOTICE OF PURCHASE WITHDRAWAL
First Union National Bank
One First Union Center
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telecopier: (000) 000-0000
Gentlemen:
Reference is made to the Deposit Agreement (Class A) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary") and to Account No. ________ (the "Account").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of $_________ from the Account.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to The First Maryland National Bank, ABA No. 000000000, Account No.
000-00-000, Attention: Credit Trust Receipts, Reference Midway EETC on _______,
199_, upon the telephonic request of a representative of the Pass Through
Trustee.
First Union Trust Company,
National Association
as Escrow Agent
By __________________________________
Name:
Title:
Dated: As of [ ]
Exhibit B
NOTICE OF PURCHASE WITHDRAWAL
First Union National Bank
One First Union Center
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telecopier: (000) 000-0000
Gentlemen:
Reference is made to the Deposit Agreement (Class B) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary") and to Account No. ________ (the "Account").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of $_________ from the Account.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to The First Maryland National Bank, ABA No. 000000000, Account No.
000-00-000, Attention: Credit Trust Receipts, Reference Midway EETC on _______,
199_, upon the telephonic request of a representative of the Pass Through
Trustee.
First Union Trust Company,
National Association
as Escrow Agent
By _______________________________
Name:
Title:
Dated: As of [ ]
Exhibit C
NOTICE OF PURCHASE WITHDRAWAL
First Union National Bank
One First Union Center
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telecopier: (000) 000-0000
Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary") and to Account No. ________ (the "Account").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of $_________ from the Account.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to The First Maryland National Bank, ABA No. 000000000, Account No.
000-00-000, Attention: Credit Trust Receipts, Reference Midway EETC on _______,
199_, upon the telephonic request of a representative of the Pass Through
Trustee.
First Union Trust Company,
National Association
as Escrow Agent
By ________________________________
Name:
Title:
Dated: As of [ ]
Exhibit D
NOTICE OF PURCHASE WITHDRAWAL
First Union National Bank
One First Union Center
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telecopier: (000) 000-0000
Gentlemen:
Reference is made to the Deposit Agreement (Class D) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary") and to Account No. ________ (the "Account").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of $_________ from the Account.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to The First Maryland National Bank, ABA No. 000000000, Account No.
000-00-000, Attention: Credit Trust Receipts, Reference Midway EETC on _______,
199_, upon the telephonic request of a representative of the Pass Through
Trustee.
First Union Trust Company,
National Association
as Escrow Agent
By __________________________________
Name:
Title:
Dated: As of [ ]
[Exhibit A-1 to
Note Purchase Agreement -
Form of Leased Aircraft
Participation Agreement]
[Exhibit C-1 to Note Purchase
Agreement - Form of Owned
Aircraft Participation Agreement]
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PARTICIPATION AGREEMENT [N ___]
Dated as of __________ __, 199_
among
MIDWAY AIRLINES CORPORATION,
THE FIRST NATIONAL BANK OF MARYLAND,
Indenture Trustee
THE FIRST NATIONAL BANK OF MARYLAND,
Pass-Through Trustee
and
THE FIRST NATIONAL BANK OF MARYLAND
Subordination Agent
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COVERING ONE CANADAIR REGIONAL JET SERIES 200ER
AIRCRAFT BEARING U.S. REGISTRATION NO. N___
TABLE OF CONTENTS
PAGE
ARTICLE 1. INTERPRETATION.................................................... 1
Section 1.01. Definitions............................................. 1
Section 1.02. References.............................................. 2
Section 1.03. Headings................................................ 2
Section 1.04. Appendices Schedules and Exhibits....................... 2
ARTICLE 2. SALE, LEASING AND SECURED LOAN TRANSACTIONS....................... 2
Section 2.01. Participation........................................... 2
(a) Secured Loan............................................ 2
(b) Delivery Date........................................... 2
Section 2.02. Closing Procedure....................................... 3
ARTICLE 3. CONDITIONS PRECEDENT.............................................. 3
Section 3.01. Conditions Precedent to Obligations of Participants..... 3
(a) Notice.................................................. 3
(b) Delivery of Documents................................... 3
(c) Airworthiness........................................... 5
(d) [Reserved].............................................. 5
(e) Violation of Law........................................ 5
(f) No Event of Default..................................... 5
(g) No Event of Loss........................................ 5
(h) Title................................................... 5
(i) Certification........................................... 5
(j) Section 1110............................................ 5
(k) Filings................................................. 6
(l) Financing Statements.................................... 6
(m) No Proceedings.......................................... 6
(n) Governmental Action..................................... 6
(o) Note Purchase Agreement................................. 6
(p) Perfected Security Interest............................. 6
Section 3.02. Conditions Precedent to Obligations of Company.......... 6
(a) Documents............................................... 7
(b) Other Conditions Precedent.............................. 7
Section 3.03. Post-Registration Opinion............................... 7
ARTICLE 4. COMPANY'S REPRESENTATIONS, WARRANTIES AND COVENANTS............... 7
Section 4.01. Company Representations and Warranties.................. 7
Section 4.02. Certain Covenants of Company............................ 10
(a) Filings and Recordings.................................. 10
(b) Registration............................................ 10
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(c) [Reserved].............................................. 12
(d) Corporate Existence..................................... 12
(e) Merger and Consolidation................................ 12
(f) Change of Location...................................... 13
(g) Notice of Lease......................................... 13
Section 4.03. Survival of Representations and Warranties.............. 13
ARTICLE 5. OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS.......... 14
Section 5.01. Representations, Warranties and Covenants of the
Indenture Trustee....................................... 14
(a) Representations and Warranties.......................... 14
(b) Indenture Trustee's Liens............................... 15
(c) Indemnity for Indenture Trustee's Liens................. 15
Section 5.02. Indenture Trustee's Notice of Default Trustee's Notice
of Default.............................................. 15
Section 5.03. Releases from Indenture................................. 15
Section 5.04. The Company's Right of Quiet Enjoyment.................. 15
Section 5.05. Pass-Through Trustee's Representations and Warranties... 15
Section 5.06. Survival of Representations, Warranties and Covenants... 16
Section 5.07. Subordination Agent's Representations, Warranties and
Covenants............................................... 17
(a) Representations and Warranties.......................... 17
(b) Covenants............................................... 18
ARTICLE 6. [RESERVED]........................................................ 19
ARTICLE 7. GENERAL INDEMNITY ................................................ 19
Section 7.01. Generally............................................... 19
(a) Indemnity............................................... 19
(b) Exceptions.............................................. 20
Section 7.02. Notice and Payment...................................... 21
Section 7.03. Defense of Claims....................................... 21
Section 7.04. Insured Claims.......................................... 22
Section 7.05. Subrogation............................................. 22
Section 7.06. Survival of Obligations................................. 22
Section 7.07. Effect of Other Indemnities............................. 22
Section 7.08. Waiver of Certain Claims................................ 22
ARTICLE 8. TRANSACTION COSTS................................................. 23
Section 8.01. Transaction Costs and Other Costs....................... 23
(a) Transaction Costs....................................... 23
(b) Continuing Expenses..................................... 23
(c) Amendments and Supplements.............................. 23
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ARTICLE 9. [RESERVED] ....................................................... 24
ARTICLE 10. LIABILITIES AND INTERESTS OF HOLDERS............................. 24
Section 10.01. Interest of Holders of Equipment Notes.................. 24
ARTICLE 11. OTHER DOCUMENTS.................................................. 24
Section 11.01. Consent of Company to Other Documents................... 24
Section 11.02. Pass-Through Trustee's and Subordination Agent's
Acknowledgment.......................................... 24
ARTICLE 12. NOTICES.......................................................... 24
Section 12.01. Notices................................................. 24
ARTICLE 13. [RESERVED]....................................................... 25
ARTICLE 14. [RESERVED]....................................................... 25
ARTICLE 15. MISCELLANEOUS ................................................... 25
Section 15.01. Counterparts............................................ 25
Section 15.02. No Oral Modifications................................... 25
Section 15.03. Captions................................................ 26
Section 15.04. Successors and Assigns.................................. 26
Section 15.05. Concerning the Indenture Trustee and the Pass-Through
Trustee................................................. 26
Section 15.06. Severability............................................ 26
Section 15.07. GOVERNING LAW........................................... 26
Section 15.08. Section 1110 Compliance................................. 27
Section 15.09. Reliance of Liquidity Providers......................... 27
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Schedule I Loan Amounts
Schedule II Debt Portion
Appendix A Definitions
Exhibit A-1(a) Form of Opinion of General Counsel of Company
Exhibit A-1(b) Form of Opinion of Special North Carolina counsel
Exhibit A-2 Form of Opinion of Fulbright & Xxxxxxxx L.L.P.
Exhibit A-3 Form of Opinion of Ober, Kaler, Xxxxxx & Xxxxxxx, as
counsel to Indenture Trustee, Subornation Agent and
Pass-Through Trustee
Exhibit A-4 Form of Opinion of Special Aviation Counsel
Exhibit B Certain Economic Information
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PARTICIPATION AGREEMENT [N____] dated as of __________, 199_ (this
"Agreement") among MIDWAY AIRLINES CORPORATION, a Delaware corporation (herein,
together with its successors and permitted assigns, the "Company"), THE FIRST
NATIONAL BANK OF MARYLAND, a national banking association, as indenture trustee
under the Indenture referred to below (together with its successors and
permitted assigns, the "Indenture Trustee"), THE FIRST NATIONAL BANK OF
MARYLAND, a national banking association, as pass-through trustee of four
separate Pass-Through Trusts (together with its successors and permitted
assigns, the "Pass-Through Trustee"), and THE FIRST NATIONAL BANK OF MARYLAND, a
national banking association, as subordination agent (together with its
successors and permitted assigns, the "Subordination Agent").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article 1 hereof.
WHEREAS, pursuant to the Purchase Agreement the Manufacturer agreed
to manufacture and sell to the Company and the Company agreed to purchase from
the Manufacturer the Aircraft; and
WHEREAS, subject to the terms and conditions of this Agreement the
Loan Participants are willing to make loans to the Company to finance a portion
of the acquisition cost of such Aircraft; and
WHEREAS, the Company and the Indenture Trustee are concurrently
entering into the Indenture for the benefit of the holders of the Equipment
Notes, pursuant to which Indenture the Company shall, subject to the terms and
conditions set forth therein, issue to the Pass-Through Trustee under each of
the Pass-Through Trust Agreements, as a Loan Participant, Equipment Notes
substantially in the form set forth in the Indenture as evidence of the loan to
be made by each such Loan Participant to the Company to finance a portion of the
acquisition cost of such Aircraft, all as more particularly described herein and
in the Indenture;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration and receipt and adequacy of
which is hereby acknowledged, and intending to be legally bound, the parties do
hereby agree as follows:
ARTICLE 1.
INTERPRETATION
Section 1.01. Definitions. Capitalized terms used herein and defined
in Appendix A shall, except as such definitions may be specifically modified in
the body
of this Agreement for the purposes of a particular section, paragraph or clause,
have the meanings given such terms in Appendix A.
Section 1.02. References. References in this Agreement to sections,
paragraphs, clauses, appendices, schedules and exhibits are to sections,
paragraphs, clauses, appendices, schedules and exhibits in and to this Agreement
unless otherwise specified.
Section 1.03. Headings. The headings of the various sections,
paragraphs and clauses of this Agreement and the table of contents are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof.
Section 1.04. Appendices Schedules and Exhibits. The appendices,
schedules and exhibits are part of this Agreement.
ARTICLE 2.
SALE, LEASING AND SECURED LOAN TRANSACTIONS
Section 2.01. Participation. Subject to all of the terms and
conditions of this Agreement, the parties agree to participate in the secured
loan transactions with respect to the Aircraft provided for in this Section 2.
(a) Secured Loan. Each Loan Participant agrees to provide
immediately available funds in the amount set forth opposite its name on
Schedule I (each such commitment being referred to as a Loan Participant's
"Commitment") to or on behalf of the Company by paying or causing to be paid
such amount to the Company, at the account specified by the Company on or prior
to the Delivery Date. Such funds shall constitute a loan to the Company to be
evidenced by the Equipment Notes and secured as provided in the Indenture.
(b) Delivery Date. The "Delivery Date" shall be the date fixed by
the Company in accordance with this Section 2(e) for the closing of the loan
transactions with respect to the Aircraft contemplated hereby, except that
following such closing the "Delivery Date" shall mean the date on which such
transactions actually closed. The Company shall give at least two Business Days'
notice to each other party hereto of the Delivery Date, which notice shall also
specify the amount of each Loan Participant's Commitment. The Company may
postpone a scheduled Delivery Date from time to time, for any reason by notice
given to the other parties hereto not later than 3:00 p.m. on the date last
scheduled as the Delivery Date, such notice to specify a new Delivery Date. The
making available by the Loan Participants of their Commitment at the closing
shall be deemed a waiver of notice of the Delivery Date by such Loan
Participants respectively and the Indenture Trustee.
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Section 2.02. Closing Procedure.
The closing shall take place at 11:00 a.m. New York City local time
on the Delivery Date at the offices of Fulbright & Xxxxxxxx L.L.P., 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx or at such other time and place as the parties may
agree. The closing shall be preceded by a pre-closing at the same place, the
time for which shall be fixed by the Company, at which the forms of the
Operative Documents to be executed, the certificates and other documents to be
delivered and the forms of the legal opinions to be delivered at the closing by
each party or its counsel pursuant to this Agreement shall be available for
inspection by the parties and their respective counsel.
ARTICLE 3.
CONDITIONS PRECEDENT
Section 3.01. Conditions Precedent to Obligations of Participants.
The obligation of each Participant to make the Dollar amount of its respective
Commitment available for payment to the Company on the Delivery Date is subject
to satisfaction or waiver by each such Participant, on or prior to the Delivery
Date, of the conditions precedent set forth below in this Section 3.01;
provided, that it shall not be a condition precedent to the obligation of any
Participant that any document be produced or action taken that is to be produced
or taken by such Participant or by a Person within such Participant's control:
(a) Notice. Such Participant shall have received the notice of the
Delivery Date as provided in Section 2(b), or shall have waived such notice.
(b) Delivery of Documents. Such Participant shall, except as noted
below, have received executed counterparts of the following agreements,
instruments, certificates or documents, and such counterparts (a) shall have
been duly authorized, executed and delivered by the respective party or parties
thereto, (b) shall be reasonably satisfactory in form and substance to such
Participant and (c) shall be in full force and effect:
(i) the Indenture;
(ii) Indenture Supplement No. 1;
(iii) the Equipment Notes dated the Delivery Date; provided that,
only the Subordination Agent shall receive the authenticated Equipment
Notes;
(iv) the broker's report and insurance certificates required by
Section 11 of the Lease;
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(v) (A) a copy of the Certificate of Incorporation and By-Laws of
Company and resolutions of the board of directors of Company and/or the
executive committee thereof, in each case certified as of the Delivery
Date, by the Secretary or an Assistant Secretary of Company, duly
authorizing the execution, delivery and performance by Company of the
Operative Agreements required to be executed and delivered by Company on
or prior to the Delivery Date in accordance with the provisions hereof and
thereof; (B) an incumbency certificate of Company and FNBM as to the
person or persons authorized to execute and deliver the relevant Operative
Agreements on behalf of such party; and (C) a copy of the Certificate of
Incorporation or Articles of Incorporation and By-Laws and general
authorizing resolutions of the boards of directors (or executive
committees) or other satisfactory evidence of authorization of FNBM,
certified as of the Delivery Date by the Secretary or an Assistant or
Assistant Secretary of FNBM, which authorize the execution, delivery and
performance by FNBM, of each of the Operative Agreements to which it is a
party, together with such other documents and evidence with respect to it
as Company or any Participant may reasonably request in order to establish
the consummation of the transactions contemplated by this Agreement and
the taking of all corporate proceedings in connection therewith;
(vi) an Officer's Certificate of Company, dated as of the Delivery
Date, stating that its representations and warranties set forth in this
Agreement are true and correct as of the Delivery Date (or, to the extent
that any such representation and warranty expressly relates to an earlier
date, true and correct as of such earlier date);
(vii) an Officer's Certificate of FNBM, dated as of the Delivery
Date, stating that its representations and warranties, in its individual
capacity or as Indenture Trustee, a Pass-Through Trustee or Subordination
Agent, as the case may be, set forth in this Agreement are true and
correct as of the Delivery Date (or, to the extent that any such
representation and warranty expressly relates to an earlier date, true and
correct as of such earlier date);
(viii) the following opinions of counsel, in each case dated the
Delivery Date:
(A) (I) Xxxxxxxx Xxxxxx, Senior Vice President and General
Counsel of the Company substantially in the form of Exhibit A-1(a) hereto
and (II) Xxxxxxx Xxxxxxxxx, Xxxxxxx & Xxxxxxx, special North Carolina
counsel to the Company, substantially in the form of Exhibit A-1(b)
hereto, in each case addressed to the Pass-Through Trustee, each Liquidity
Provider and the Indenture Trustee.
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(B) Fulbright & Xxxxxxxx, L.L.P. special counsel for the
Company substantially in the form of Exhibit A-2 hereto addressed to the
Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass-Through Trustee, each Liquidity Provider and the Company;
(C) Ober, Kaler, Xxxxxx & Xxxxxxx, special counsel for the
Indenture Trustee, Pass-Through Trustee and Subordination Agent in the
form of Exhibit A-3 hereto and addressed to the Indenture Trustee, the
Pass-Through Trustee, each Liquidity Provider and the Company; and
(D) Xxxxx & Xxxxxxx P.C., special aviation counsel,
substantially in the form of Exhibit A-4 hereto and addressed to the
Indenture Trustee, the Pass-Through Trustee, each Liquidity Provider and
the Company.
(c) Airworthiness. Each Participant shall receive a copy of a
current, valid Standard Certificate of Airworthiness for the Aircraft duly
issued by the FAA.
(d) [Reserved]
(e) Violation of Law. No change shall have occurred after the date
of this Agreement in any Applicable Law that makes it a violation of Law for (a)
Company, any Participant, Subordination Agent, or the Indenture Trustee to
execute, deliver and perform the Operative Agreements to which any of them is a
party or (b) any Participant to make the Dollar amount of its Commitment
available or, to acquire an Equipment Note or to realize the benefits of the
security afforded by the Indenture.
(f) No Event of Default. On the Delivery Date, no event shall have
occurred and be continuing, or would result from the sale or mortgage of the
Aircraft, which constitutes an Indenture Default or Indenture Event of Default.
(g) No Event of Loss. No Event of Loss with respect to the Airframe
or any Engine shall have occurred and no circumstance, condition, act or even
that, with the giving of notice or lapse of time or both, would give rise to or
constitute an Event of Loss with respect to the Airframe or any Engine shall
have occurred.
(h) Title. The Company shall have good title (subject to filing and
recordation of the FAA Xxxx of Sale with the FAA) to the Aircraft, free and
clear of Liens, except Permitted Liens.
(i) Certification. The Aircraft shall have been duly certificated by
the FAA as to type and airworthiness as required by the terms of the Indenture.
(j) Section 1110. The Indenture Trustee shall be entitled to the
benefits of Section 1110 (as currently in effect) with respect to the right to
take
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possession of the Airframe and Engines as provided in the Indenture in the event
of a case under Chapter 11 of the Bankruptcy Code in which Company is a debtor.
(k) Filings. On the Delivery Date (i) application for registration
of the Aircraft in the name of the Company shall have been duly made with the
FAA in compliance with the provisions of the Transportation Code; and (ii) the
Indenture, Indenture Supplement No. 1 and the FAA Xxxx of Sale shall have been
duly filed for recordation (or shall be in the process of being so duly filed
for recordation) with the FAA in accordance with the Transportation Code.
(l) Financing Statements. A Uniform Commercial Code financing
statement or statements covering the security interest contemplated by the
Indenture shall have been executed and delivered by the Company as debtor and by
the Indenture Trustee as secured party, and such financing statement or
statements shall have been duly filed in all places necessary or desirable
within the State of North Carolina.
(m) No Proceedings. No action or proceeding shall have been
instituted, nor shall any action be threatened in writing, before any
governmental authority, nor shall any order, judgment or decree have been issued
or proposed to be issued by any Governmental authority, to set aside, restrain,
enjoin or prevent the completion and consummation of this Agreement or any other
Operative Agreement or the transactions contemplated hereby or thereby.
(n) Governmental Action. All appropriate action required to have
been taken prior to the Delivery Date by the FAA, or any governmental or
political agency, subdivision or instrumentality of the United States, in
connection with the transactions contemplated by this Agreement shall have been
taken, and all orders, permits, waivers, authorizations, exemptions and
approvals of such entities required to be in effect on the Delivery Date in
connection with the transactions contemplated by this Agreement shall have been
issued.
(o) Note Purchase Agreement. The conditions precedent to the
obligations of the Loan Participants and the other requirements relating to the
Aircraft and the Equipment Notes set forth in the Note Purchase Agreement shall
have been satisfied.
(p) Perfected Security Interest. On the Delivery Date, after giving
effect to the filing of the documents referenced in Section 3.01(k)(ii) and the
financing statements referenced in Section 3.01(l), the Indenture Trustee shall
have received a duly perfected first priority security interest in all of
Company's right, title and interest in the Aircraft, subject only to Permitted
Liens.
Section 3.02. Conditions Precedent to Obligations of Company. The
obligation of Company to participate in the loan transaction on the Delivery
Date is subject to the satisfaction or waiver by Company, on or prior to the
Delivery Date, of the conditions precedent set forth below in this Section 3.02.
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(a) Documents. Executed originals of the agreements, instruments,
certificates, documents and opinions described in Section 3.01(b) shall have
been received by Company, except as specifically provided therein, and shall be
satisfactory to Company, unless the failure to receive any such agreement,
instrument, certificate or document is the result of any action or inaction by
Company.
(b) Other Conditions Precedent. Each of the conditions set forth in
Sections 3.01(c), (d) (as to all Participants), (e), (f), (h), (i), (j), (k),
(l), and (m) shall have been satisfied or waived by Company, unless the failure
of any such condition to be satisfied is the result of any action or inaction by
Company.
Section 3.03. Post-Registration Opinion. Promptly upon the
registration of the Aircraft and the recordation of the Documents referenced in
Section 3.01(l)(ii), Company will direct Xxxxx & Xxxxxxx P.C., special counsel
in Oklahoma City, Oklahoma, to deliver to Company, each Participant and the
Indenture Trustee a favorable opinion or opinions addressed to each of them with
respect to such registration and recordation.
ARTICLE 4.
COMPANY'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 4.01. Company Representations and Warranties. The Company
represents and warrants that, as of the Delivery Date (unless any such
representation and warranty is specifically made as of an earlier date, in which
case the Company represents and warrants as of such earlier date):
(a) the Company is a corporation duly organized and validly existing
and is in good standing under the laws of Delaware, has its principal place of
business and chief executive office (as such terms are used in Article 9 of the
Uniform Commercial Code) in Durham, North Carolina, and is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the failure to be so qualified or in good standing would have a materially
adverse effect on its business or would impair its ability to perform its
obligations under the Company Documents;
(b) the Company has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its properties and to enter into and perform its obligations under the
Company Documents;
(c) the Company is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Section 41102(a) of the
Transportation Code and a "citizen of the United States" within the meaning of
Section 40102(a)(15) of the Transportation Code holding an "air carrier
operating certificate" issued under Chapter 447 of the Transportation Code for
aircraft capable of carrying
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ten or more individuals or 6,000 pounds or more of cargo, and each such
certificate is in full force and effect;
(d) the Company possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively "permits")
which are necessary to the operation of the routes flown by it and the conduct
of its business and operations as currently conducted and each such permit is in
full force and effect, except for any such permits the failure to have or
maintain which would not have a material adverse effect on the Company or its
ability to perform its obligations under the Company Documents;
(e) the execution, delivery and performance of the Company Documents
by the Company have been duly authorized by all necessary corporate action on
the part of the Company and do not require any stockholder approval, or approval
or consent of any trustee or holder of any indebtedness or obligations of the
Company, and each such Company Documents has been duly executed and delivered
and constitutes the legal, valid and binding obligations of the Company
enforceable against it in accordance with the terms thereof except as such
enforceability may be limited by bankruptcy, insolvency, or other similar laws
or by general equitable principles;
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state governmental
authority or regulatory body is required for the execution, delivery or
performance by the Company of the Company Documents except for such
registrations, applications and recordings referred to in the opinion of Xxxxx
and Xxxxxxx P.C. delivered pursuant to Sections 3.01(b)(viii)(D) and the filings
referred to in Section 3.01(k)(ii);
(g) neither the execution, delivery or performance by the Company of
the Company Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a breach
or violation of any of the terms, conditions or provisions of, or will require
any consent or approval under, any law, governmental rule or regulation or the
charter documents, as amended, or bylaws, as amended, of the Company or any
order, writ, injunction or decree of any court or governmental authority against
the Company or by which it or any of its properties is bound or any indenture,
mortgage or contract or other agreement or instrument to which the Company is a
party or by which it or any of its properties is bound, or constitutes or will
constitute a default thereunder or results or will result in the imposition of
any Lien upon any of its properties (other than Permitted Liens), except for any
such conflict, breach or default which would not have a material adverse effect
on the Company or its ability to perform its obligations under the Company
Documents;
(h) except as disclosed in the Offering Memo, there are no pending
or, to the knowledge of the Company, threatened actions, suits, investigations
or proceedings against or affecting the Company or any of its properties before
or by any court or administrative agency which, (A) may reasonably be expected
to have a
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materially adverse effect on the Company's consolidated financial condition,
business, or operations, or (B) would materially adversely affect the ability of
the Company to consummate the transactions contemplated by the Operative
Documents or to perform its obligations under the Company Documents;
(i) the Company shall not be in default (after any applicable grace
periods) in the performance of any material term or condition of the Purchase
Agreement;
(j) except for (A) the registration in the Company's name of the
Aircraft pursuant to the Transportation Code, (B) the filing with and, where
appropriate, recordation by the FAA pursuant to the Transportation Code of the
Indenture (including Indenture Supplement No. 1), and (C) the filing of the
financing statements referred to in Sections 3.01(l), no further action,
including any filing or recording of any document, is necessary or advisable in
order to perfect the first security interest in and Lien on the Collateral in
favor of the Indenture Trustee;
(k) the Company has received good and marketable title to the
Aircraft, free and clear of all Liens, except Permitted Liens;
(l) assuming the truth of the representations contained in Section
3.12 of the Pass-Through Trust Agreements and compliance with Section 10.06 of
the Indenture, the execution and delivery of this Agreement and the other
Operative Agreements and the consummation of the transactions contemplated
hereby and thereby will not involve any prohibited transaction within the
meaning of Section 406(a) of ERISA, or Section 4975(c)(1)(A) through (D) of the
Code;
(m) all premiums which have become due with respect to the insurance
required to be provided by the Company on or prior to the Delivery Date under
Section 9 of the Lease have been paid by the Company;
(n) no Default exists and no Event of Loss, or event which with the
passage of time would constitute an Event of Loss, exists;
(o) the Aircraft is in such condition so as to enable the
airworthiness certificate of such Aircraft to be in good standing under the
Transportation Code; the Aircraft has been duly certificated by the FAA as to
type and airworthiness; there is in effect with respect to the Aircraft a
current and valid airworthiness certificate issued by the FAA pursuant to the
Transportation Code;
(p) neither the Company nor any subsidiary of the Company is an
"investment company" or a company "controlled by an investment company" within
the meaning of the Investment Company Act of 1940, as amended;
(q) there are no broker's or underwriter's fees payable on behalf of
the Company in connection with the transactions contemplated in the Operative
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Agreements, other than those of the Placement Agents and the Company Advisor
referred to in Article 8 hereof; and
(r) the Company represents and warrants that it has authorized no
one to act on its behalf in connection with the offer or sale of any interest in
the Equipment Notes or the Pass-Through Certificates other than the Placement
Agents.
Section 4.02. Certain Covenants of Company. The Company covenants
and agrees as follows:
(a) Filings and Recordings. The Company will cause to be done,
executed, acknowledged and delivered at the Company's cost and expense all such
further acts, conveyances and assurances as the Indenture Trustee or the
Pass-Through Trustee shall reasonably require for accomplishing the purposes of
the Operative Agreements. Without limiting the generality of this Section
4.02(a), the Company will promptly take, or cause to be taken, at the Company's
cost and expense, such action with respect to the recording, filing,
re-recording and re-filing of the Indenture (including each supplement thereto),
the Lease (including each supplement thereto), and any financing statements or
other instruments as may be reasonably requested by the Indenture Trustee and
appropriate, to maintain the perfection of the first security interest and the
Lien created by the Indenture, as against the Company and any third parties, or
if the Company cannot take, or cause to be taken, such action, will furnish to
the Indenture Trustee timely notice of the necessity of such action, together
with such instruments, in execution form, and such other information as may be
required to enable either of them to take such action at the Company's cost and
expense in a timely manner.
(b) Registration. From and after the Delivery Date, the Company
shall cause the Aircraft to be duly registered, and at all times to remain duly
registered, in the name of the Company under the Transportation Code, provided,
however, that the Company may, at any time cause the Aircraft to be
appropriately re-registered under the laws of a country with which at the time
of such registration the United States maintains normal diplomatic relations and
is listed on Exhibit C to the Indenture; provided that:
(i) at the time of re-registration, no Specified Default exists or
would occur as a result of such re-registration;
(ii) the Company shall pay all fees and expenses (including the
reasonable fees and expenses of local counsel in such country) relating to
such re-registration;
(iii) the Company shall, at its cost, cause the interest of the
Company as owner of the Aircraft and the Indenture Trustee as mortgagee
thereof to be duly registered or recorded under the laws of such country
and at all times thereafter to remain so duly registered or recorded
unless and until the
-10-
registration of the Aircraft is changed as provided herein, and shall
cause to be done at all times all other acts including the filing,
recording and delivery of any document or instrument and the payment of
any sum necessary or, by reference to prudent industry practice in such
country, advisable in order to create, preserve and protect such interest
in the Aircraft (including the first priority duly perfected Lien under
the Indenture) as against the Company or any third parties in such
jurisdiction, and the laws of such country would give effect to the
Indenture Trustee's Lien thereon;
(iv) the obligations of the Company and each other party under the
Operative Documents (and of the Permitted Lessee, if any, under a Lease)
shall remain or be, as the case may be, legal, valid, binding and
enforceable in such country;
(v) The Company shall ensure that all insurance provided for herein
shall be in full force and effect prior to, at the time of, and after such
change in registration and the Indenture Trustee shall receive a
certificate of Company's insurance broker to such effect;
(vi) the country of such re-registration imposes aircraft
maintenance standards approved by, or at least as stringent as those
approved by, the FAA or the central civil aviation authority of the United
Kingdom, France, Germany, Japan, the Netherlands or Canada;
(vii) it shall not be necessary by reason of such re-registration or
for purposes of enforcing remedies contained in the Indenture or the
related Lease for the Indenture Trustee to register or qualify to do
business in such country;
(viii) no Liens (except Permitted Liens) shall arise by reason of
such reregistration, and the Indenture shall continue as a first priority
Lien on the collateral thereunder;
(ix) the Indenture Trustee shall not be subjected to any adverse tax
consequences for which the Company is not required to and does not then
indemnify such Person in a manner reasonably satisfactory to such Person
as a result of such re-registration:
(x) any export licenses and certificate of deregistration required
in connection with any repossession or return of the Aircraft will be
readily obtain able in the normal course without material delay or
material burden on the Indenture Trustee, it being agreed that the Company
shall be responsible be responsible for the cost thereof; and
(xi) the Indenture Trustee shall have received opinions in scope,
form and substance reasonably satisfactory to them, of counsel, expert in
the laws of such
-11-
country, to the effect set forth in clauses (iii), (iv) (with respect to
the obligations of the Company under the Indenture), (vii) and (x).
The Company agrees to pay on an After-Tax Basis all reasonable
out-of-pocket costs and expenses (including, without limitation, reasonable
counsel fees and disbursements) of the Indenture Trustee in connection with any
re-registration pursuant to this Section.
(c) [Reserved]
(d) Corporate Existence. The Company shall at all times maintain its
corporate existence except as permitted by Section 4.02(e) hereof and all of its
rights, privileges and franchises necessary in the normal conduct of its
business, except for any corporate right, privilege or franchise that it
determines, is no longer necessary or desirable in the conduct of its business.
(e) Merger and Consolidation. So long as the Lien of the Indenture
has not been discharged, the Company shall not enter into any merger with or
into or consolidation with, or sell, convey, transfer, lease or otherwise
dispose of in one or a series of transactions all or substantially all of its
assets as an entirety to any Person, unless the surviving corporation or Person
which acquires by purchase, conveyance, transfer or lease all or substantially
all of the assets of the Company as an entirety (i) is a domestic corporation
organized and existing under the laws of the United States or any State of the
United States (ii) is a Citizen of the United States, (iii) is a Section 1110
Person, so long as such status is a condition to the availability of Section
1110 of the Bankruptcy Code, (iv) if not the Company, executes a duly
authorized, legal, valid, binding, and enforceable agreement containing an
effective assumption of all of the Company's, as applicable, obligations
hereunder and under the other Operative Agreements, and each other document
contemplated hereby or thereby and delivers such instrument to the Indenture
Trustee, (v) provides an opinion from counsel (which counsel may be in the
Company's General Counsel) delivered to the Indenture Trustee, which opinion
shall be reasonably satisfactory to the Indenture Trustee, and an officer's
certificate (which may rely, as to legal matters, on such legal opinion), each
stating that such merger, consolidation, conveyance, transfer, lease or other
disposition and the instrument noted in clause (iv) above comply with this
Section 4.02(e), that such instrument is a legal, valid and binding obligation
of, and is enforceable against, such survivor or Person, and that all conditions
precedent herein provided for relating to such transaction have been complied
with, and (vi) such survivor or Person makes such filings and recordings with
the FAA as may be required pursuant to part A of subtitle VII or Xxxxx 00,
Xxxxxx Xxxxxx Code to evidence such merger or consolidation; provided that, no
such merger, consolidation or conveyance, transfer or lease shall be permitted
if, immediately after giving effect such consolidation, merger, purchase,
conveyance, transfer, lease or other disposition, an Event of Default shall have
occurred and be continuing.
-12-
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Company and the
satisfaction of the conditions specified in this Section 4.02(e), the successor
corporation formed by such consolidation or into which the Company is merged or
the Person to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Agreement and the Lease and each other Operative Agreement and any
other document contemplated hereby and thereby to which the Company is a party
with the same effect as if such successor corporation had been named as the
Company herein and therein. No such conveyance, transfer or lease of all or
substantially all of the assets of the Company as an entirety shall have the
effect of releasing the Company or any successor corporation which shall
theretofore have become the Company hereunder in the manner prescribed in this
Section 4.02(e) from its liability hereunder or under the other Operative
Agreements. Nothing contained herein shall permit any lease, sublease, or other
arrangement for the use, operation or possession of the Aircraft except in
compliance with the applicable provisions of the Lease.
(f) Change of Location. The Company agrees to give prompt written
notice to the Indenture Trustee of any change in the address of its chief
executive office (as such term is used in Section 9-103(3) of the North Carolina
Uniform Commercial Code) or of any change in its corporate name, provided that,
notice is hereby given that the Company plans to so change such address on or
about January 1, 1999 to 0000 Xxxxxx Xxxx, Xxxxxxxxxxx, XX 00000.
(g) Notice of Lease. In the event that the Company leases the
Aircraft pursuant to Section 4.01(b)(x) of the Indenture, it shall give notice
of such lease (promptly thereafter) to each of (i) Xxxxx'x Investor Service, 00
Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Rating Division
(facsimile no.: (000) 000-0000) and (ii) Standard and Poor's Rating Agency, 00
Xxxxxxxx, 00xx Xxxxx, Xxx xxxx, Xxx Xxxx 00000 (facsimile no.: (000) 000-0000).
Section 4.03. Survival of Representations and Warranties. The
representations and warranties of the Company provided in Section 4.01 and in
any other Operative Agreement shall survive the delivery of the Aircraft and the
expiration or other termination of this Agreement and the other Operative
Agreements.
-13-
ARTICLE 5.
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.01. Representations, Warranties and Covenants of the
Indenture Trustee.
(a) Representations and Warranties. The Indenture Trustee in its
individual capacity represents on the Delivery Date as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
and has the power and authority to enter into and perform its obligations
under the Indenture, this Agreement and the other Operative Agreements to
which it is a party and to authenticate the Equipment Notes to be
delivered on the Delivery Date;
(ii) the Indenture and this Agreement and the other Operative
Agreements to which it is or is to be a party, and the authentication of
the Certificates, have been duly authorized by all necessary corporate
action on its part, and neither the execution and delivery thereof nor its
performance of any of the terms and provisions thereof will violate any
federal or Maryland law or regulation relating to its banking or trust
powers or contravene or result in any breach of, or constitute any default
under, its articles of association or by-laws;
(iii) each of the Indenture and this Agreement, and the other
Operative Agreements to which it is a party, has been duly executed and
delivered by it and, assuming that each such agreement is the legal, valid
and binding obligation of each other party thereto, is (or will be, as the
case may be), the legal, valid and binding obligation of the Indenture
Trustee, enforceable against the Indenture Trustee in accordance with its
terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable principles
of general application to or affecting the enforcement of creditors'
rights (regardless of whether enforceability is considered in a proceeding
in equity or at law);
(iv) neither the execution and delivery by it of the Indenture and
this Agreement and the other Operative Agreements to which it is or is to
be a party, nor the performance by it of any of the transactions
contemplated hereby or thereby, requires the consent or approval of, the
giving of notice to, the registration with, or the taking of any other
action in respect of, any Federal or state governmental authority or
agency governing its banking and trust powers; and
(v) it has made a filing with the New York State Banking Department
under Section 131(3) of the New York Banking Law in respect of the
performance of its duties relating to the Trust Indenture.
-14-
(b) Indenture Trustee's Liens. The Indenture Trustee, in its
individual capacity, represents, warrants and covenants that there are no
Indenture Trustee's Liens. The Indenture Trustee, in its individual capacity,
covenants and agrees that it will at its own expense take such action as may be
necessary to duly discharge and satisfy in full, promptly, and in any event
within 30 days, after the same shall first become known to it, any Indenture
Trustee's Liens.
(c) Indemnity for Indenture Trustee's Liens. The Indenture Trustee,
in its individual capacity, agrees to indemnify and hold harmless the Company
and the Pass-Through Trustee from and against any actual out-of-pocket loss,
cost, expense or damage which may be suffered by the Company or the Pass-Through
Trustee as a result of the failure of the Indenture Trustee to discharge and
satisfy any Indenture Trustee's Liens attributable to it in its individual
capacity, as described in Section 5.01(b) hereof.
Section 5.02. Indenture Trustee's Notice of Default Trustee's Notice
of Default. The Indenture Trustee agrees to give the Company notice of any
Indenture Default or Indenture Event of Default promptly upon a Responsible
Officer of the Indenture Trustee having actual knowledge thereof.
Section 5.03. Releases from Indenture. The Indenture Trustee
covenants and agrees, for the benefit of the Company to execute and deliver the
instruments of release from the Lien of the Indenture which it is required to
execute and deliver in accordance with the provisions of Article XIV of the
Indenture.
Section 5.04. The Company's Right of Quiet Enjoyment.
Notwithstanding any other provision of any of the Operative Agreements, each
other party to this Agreement agrees, severally and as to its own actions only,
that it will not, so long as no Indenture Event of Default shall have occurred
and be continuing, take or cause to be taken any action contrary to the
Company's rights under the Indenture, including, without limitation, its rights
to possession, use and quiet enjoyment of the Aircraft during the Term.
Section 5.05. Pass-Through Trustee's Representations and Warranties.
The Pass-Through Trustee, in its individual capacity, represents and warrants as
of the Delivery Date that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
and has full the power and authority to enter into and perform its
obligations under the Pass-Through Trust Agreements, the Intercreditor
Agreement and this Agreement and to execute and authenticate the
Pass-Through Certificates to be delivered on the Pass-Through Closing
Date;
(ii) the execution, delivery and performance of this Agreement, and
the Pass-Through Trust Agreement and the performance of its obligations
hereunder
-15-
and thereunder have been fully authorized by all necessary corporate
action on its part, and neither the execution and delivery thereof nor its
performance of any of the terms and provisions thereof will violate any
federal or Maryland law or regulation relating to its banking or trust
powers or contravene or result in any breach of, or constitute any default
under its articles of association, or bylaws or the provisions of any
indenture, mortgage, contract or other agreement to which it is a party or
by which it or its properties may be bound or affected; and
(iii) each of this Agreement and the Pass-Through Trust Agreement
has been duly executed and delivered by it (in its individual and trust
capacities) and, assuming that each such agreement is the legal, valid and
binding obligation of each other party thereto, is or will be, as the case
may be, the legal, valid and binding obligation of the Pass-Through
Trustee (in its individual and trust capacities), enforceable in
accordance with its respective terms except as limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(iv) there are no Taxes payable by the Pass-Through Trustee imposed
by the State of Maryland or any political subdivision or taxing authority
thereof in connection with the execution, delivery and performance by the
Pass-Through Trustee of this Agreement, any of the Pass-Through Trust
Agreements (other than franchise or other taxes based on or measured by
any fees or compensation received by the Pass-Through Trustee for services
rendered in connection with the transactions contemplated by the
Pass-Through Trust Agreements), and there are no Taxes payable by the
Pass-Through Trustee imposed by the State of Maryland or any political
subdivision thereof in connection with the acquisition, possession or
ownership by the Pass-Through Trustee of any of the Certificates other
than franchise or other taxes based on or measured by any fees or
compensation received by the Pass-Through Trustee for services rendered in
connection with the transactions contemplated by the Pass-Through Trust
Agreements;
Section 5.06. Survival of Representations, Warranties and Covenants.
Representations, warranties and covenants of the Pass-Through Trustee (in its
individual or trust capacity), the Indenture Trustee (in its individual or trust
capacity) and the Subordination Agent (in its individual or trust capacity)
provided for in this Article 5, and their respective obligations under any and
all of them, shall survive the delivery of the Aircraft and the expiration or
other termination of this Agreement and the other Operative Agreements.
-16-
Section 5.07. Subordination Agent's Representations, Warranties and
Covenants.
(a) Representations and Warranties. The Subordination Agent
represents and warrants as of the Delivery Date that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
and has the corporate power and authority to enter into and perform its
obligations under this Agreement, the Liquidity Facilities and the
Intercreditor Agreement;
(ii) the execution, delivery and performance of this Agreement, each
of the Liquidity Facilities and the Intercreditor Agreement and the
performance of its obligations hereunder and thereunder have been fully
authorized by all necessary, corporate action on its part, and, neither
the execution and delivery thereof nor its performance of any of the terms
and provisions thereof will violate any federal or Maryland law or
regulation relating to its banking or trust powers or contravene or result
in any breach of, or constitute any default under its articles of
association, or bylaws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it or its
properties may be bound or affected;
(iii) each of this Agreement, the Liquidity Facilities and the
Intercreditor Agreement has been duly executed and delivered by it and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Subordination Agent,
enforceable in accordance with its respective terms except as limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) there are no Taxes payable by the Subordination Agent imposed
by the State of Maryland or any political subdivision or taxing authority
thereof in connection with the execution, delivery and performance by the
Subordination Agent of this Agreement, any of the Liquidity Facilities or
the Intercreditor Agreement (other than franchise or other taxes based on
or measured by any fees or compensation received by the Subordination
Agent for services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the Liquidity
Facilities), and there are no Taxes payable by the Subordination Agent
imposed by the State of Maryland or any political subdivision thereof in
connection with the acquisition, possession or ownership by the
Subordination Agent of any of the Certificates other than franchise or
other taxes based on or measured by any fees or compensation received by
the Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
-17-
(v) to the best of the Subordination Agent's knowledge, there are no
pending or threatened actions or proceedings against the Subordination
Agent before any court or administrative agency which individually or in
the aggregate, if determined adversely to it, would materially adversely
affect the ability of the Subordination Agent to perform its obligations
under this Agreement, the Intercreditor Agreement or any Liquidity
Facility;
(vi) the Subordination Agent has not directly or indirectly offered
any Certificate for sale to any Person or solicited any offer to acquire
any Certificates from any Person, nor has the Subordination Agent
authorized anyone to act on its behalf to offer directly or indirectly any
Certificate for sale to any Person, or to solicit any offer to acquire any
Certificate from any Person; and the Subordination Agent is not in default
under any Liquidity Facility; and
(vii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter or the Company.
(b) Covenants.
(i) The Subordination Agent agrees not to amend any Liquidity
Facility or the Intercreditor Agreement without the consent of the
Company.
(ii) At any time when directed by the Company, the Subordination
Agent shall replace any Liquidity Provider pursuant to Section 3.6(e) of
the Intercreditor Agreement. Except as otherwise expressly provided in the
Intercreditor Agreement, the Subordination Agent shall not in any other
instance replace any Liquidity Provider in respect of any Liquidity
Facility.
(iii) In connection with the deposit in the applicable Cash Account
of amounts drawn pursuant to any Downgrade Drawing or Non-Extension
Drawing (as defined in the Liquidity Facility) under a Liquidity Facility,
the Subordination Agent agrees, so long as no Event of Default shall have
occurred and be continuing, to pay to the Company promptly following each
Regular Distribution Date any Investment Earnings on the amount so
deposited which remain after application of such Investment Earnings
pursuant to Section 2.06 of such Liquidity Facility to the interest
payable on such Downgrade Drawing under Section 3.07 of such Liquidity
Facility. Capitalized terms used in this Section 7.01(b) shall have the
meanings specified in the Intercreditor Agreement.
-18-
ARTICLE 6.
[RESERVED]
ARTICLE 7.
GENERAL INDEMNITY
Section 7.01. Generally.
(a) Indemnity. The Company agrees to indemnify each Indemnitee
against and agrees to protect, defend, save and keep harmless each Indemnitee
against and in respect of, and will pay on an After-Tax Basis, from any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs, disbursements and expenses, demands or judgments (including reasonable
legal fees and expenses) of every kind and nature, whether or not any of the
transactions contemplated by this Agreement are consummated (individually, an
"Expense," collectively, "Expenses"), which may be imposed on, incurred or
suffered by or asserted against any Indemnitee, in any way relating to, arising
out of or in connection with, any one or more of the following:
(i) any Operative Agreement or Pass-Through Document or any
transaction contemplated hereby or thereby;
(ii) the operation, possession, use, non-use, maintenance, storage,
overhaul, delivery, non-delivery, control, repair or testing of the
Aircraft, Airframe, or any Engine or any engine used in connection with
the Airframe, or any Part thereof by the Company, any sublessee or any
other Person whatsoever, whether or not such operation, possession, use,
non-use, maintenance, storage, overhaul, delivery, non-delivery, control,
repair or testing is in compliance with the terms of the Lease, including,
without limitation, claims for death, personal injury or property damage
or other loss or harm to any Person whatsoever, including, without
limitation, any passengers, shippers or other Persons wherever located,
and claims or penalty relating to any laws, rules or regulations,
including, without limitation, environmental control, noise and pollution
laws, rules or regulation;
(iii) the manufacture, design, sale, return, purchase, acceptance,
rejection, delivery, non-delivery, condition, repair, modification,
servicing, rebuilding, airworthiness, registration, reregistration,
deregistration, ownership, financing, import, export, performance,
non-performance, lease, sublease, transfer, merchantability, fitness for
use, alteration, substitution or replacement of any Airframe, Engine, or
Part or other transfer of use or possession, or other disposition of the
Aircraft, the Airframe, any Engine or any Part including, without
limitation, latent and other defects, whether or not discoverable, strict
tort liability, and any claims for patent, trademark or copyright
infringement;
-19-
(iv) any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Company under any of the Operative Agreements
or any Pass-Through Trust Agreement, or the falsity or inaccuracy of any
representation or warranty of the Company in any of the Operative
Agreements or any Pass-Through Trust Agreement (other than representations
and warranties in the Tax Indemnity Agreement);
(v) the enforcement of the terms of the Operative Agreements; and
(vi) the offer, issuance, sale or delivery of any Equipment Note or
any Pass-Through Certificate.
(b) Exceptions. The indemnity provided for in Section 7.01(a) shall
not extend to any Expense of any Indemnitee to the extent it:
(i) is attributable to the willful misconduct or gross negligence of
such Indemnitee (other than gross negligence or willful misconduct imputed
to such person by reason of its interest in the Aircraft or any
transaction documents);
(ii) is a Tax or loss of a Tax benefit;
(iii) is a cost or expense required to be paid by such Indemnitee or
its permitted transferees (and not by the Company) pursuant to this
Agreement or any other Operative Agreement and for which the Company is
not otherwise obligated to reimburse such Indemnitee, directly or
indirectly pursuant to the terms of this Agreement or such other Operative
Agreement;
(iv) is attributable to the incorrectness or breach such by any
Indemnitee of its representations or warranties, under any of the
Operative Agreements;
(v) is attributable to the failure by any Indemnitee to perform any
of its obligations under any of the Operative Agreements;
(vi) is an Expense arising under or in connection with any
"prohibited transaction", within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Code or any similar provision of state law;
(vii) except during the continuation of an Event on Default, is
attributable to any amendment to any of the Operative Agreements which is
not requested by the Company or is not required or made pursuant to the
terms of any of the Operative Agreements;
-20-
(viii) is attributable to the exercise by any Indemnitee of any
right to inspect the Aircraft except with respect to any such inspection
conducted while an Event of Default is continuing; and
(ix) constitutes the loss of future profits or losses attributable
to such Indemnitee's overhead.
Section 7.02. Notice and Payment. Each Indemnitee shall give prompt
written notice to the Company of any liability for which the Company is, or may
be, liable under this Article 7; provided, however, that failure to give such
notice shall not terminate any of the rights of an Indemnitee under this Article
7, except to the extent that such failure adversely affects any applicable
defense or counterclaim, otherwise increases the amount the Company would have
been liable for in the absence of such failure to provide such notice or
adversely affects the ability of Company's insurers to defend such claim.
Section 7.03. Defense of Claims. The Company or its insurers shall
have the right (in each such case at the Company's sole expense) to investigate,
defend (and control the defense of) any such claim for which indemnification is
sought pursuant to this Article 7 and each Indemnitee shall cooperate with the
Company or its insurers with respect thereto, provided that, without limiting
the right of the Company's insurers to assume and control the defense of, or to
compromise, any such claim, the Company shall not be entitled to assume and
control the defense of or compromise any such claim (A) during the continuance
of any Event of Default arising under Section 14(a) of the Lease, (B) if an
actual or potential material conflict of interest exists making it advisable (on
the basis of prevailing standards of professional responsibility) for such
Indemnitee to be represented by separate counsel or on the grounds that such
proceeding involves the potential imposition of criminal liability on such
Indemnitee or (C) such proceeding will involve any material risk of the sale,
forfeiture or loss of, or the creation of any Lien (other than Permitted Liens)
on the Aircraft or the Trust Estate (unless the Company posts a bond or other
security reasonably acceptable in form and substance to such Indemnitee) or
involve any material risk of criminal liability to such Indemnitee for which it
is not indemnified hereunder and, in any such case, the relevant Indemnitee
will, in good faith, undertake the defense of such claim at the expense of the
Company. Subject to the immediately foregoing sentence, where the Company or the
insurers under a policy of insurance maintained by the Company undertake the
defense of an Indemnitee with respect to such a claim, no additional legal fees
or expenses of such Indemnitee in connection with the defense of such claim
shall be indemnified hereunder unless the fees or expenses were incurred at the
written request of the Company or such insurers. Subject to the requirement of
any policy of insurance applicable to a claim, an Indemnitee may participate at
its own expense at any judicial proceeding controlled by the Company or its
insurers pursuant to the preceding provisions, to the extent that such party's
participation does not, in the opinion of the independent counsel appointed by
the Company or its insurers to conduct such proceedings, interfere with such
control; and such participation shall not constitute a waiver of the
indemnification provided in this Section 7.03. No Indemnitee
-21-
shall enter into any settlement or other compromise with respect to any claim
described in this Section 7.03 without the prior written consent of the Company,
unless such Indemnitee waives its right to be indemnified under this Article 7
with respect to such claim. The Company shall not enter into any settlement or
compromise with respect to which the Company has not agreed to indemnify such
Indemnitee to such Indemnitee's satisfaction or which admits any criminal
violation, gross negligence or willful misconduct on the part of any Indemnitee
without the prior written consent of such Indemnitee.
Section 7.04. Insured Claims. Notwithstanding any other provision of
this Article 7 to the contrary, in the case of any claim indemnified by the
Company hereunder which is covered by a policy of insurance maintained by the
Company pursuant to Section 9 of the Lease or otherwise, it shall be a condition
of such indemnity with respect to any particular Indemnitee that such Indemnitee
shall cooperate with the insurers in the exercise of their rights to
investigate, defend or compromise such claim as may be required to retain the
benefits of such insurance with respect to such claim.
Section 7.05. Subrogation. To the extent that an Expense indemnified
by the Company under this Article 7 is in fact paid by the Company and/or an
insurer under a policy of insurance maintained by the Company, the Company
and/or such insurer as the case may be shall be subrogated to the extent of such
payment to the rights and remedies of the Indemnitee on whose behalf such
Expense was paid with respect to the transaction or event giving rise to such
Expense. Should an Indemnitee receive any refund, in whole or in part, with
respect to any Expense paid by the Company hereunder, it shall promptly pay over
the amount refunded, together with any interest received with respect to such
amount for the period between the indemnification payment and the receipt of
such refund, to the Company.
Section 7.06. Survival of Obligations. The indemnities and
agreements of the Company provided for in this Article 7 shall survive the
expiration or other termination of this Agreement.
Section 7.07. Effect of Other Indemnities. The Company's obligations
under this Article 7 shall be those of a primary obligor whether or not the
Person indemnified shall also be indemnified with respect to the same matter
under the terms of this Agreement, or any other document or instrument, and the
Person seeking indemnification from the Company pursuant to any provision of
this Agreement may proceed directly against the Company without first seeking to
enforce any other right of indemnification.
Section 7.08. Waiver of Certain Claims. The Company hereby waives
and releases any Claim now or hereafter existing against any Indemnified Person
arising out of death or personal injury to personnel of the Company, loss or
damage to property of the Company, or the loss of use of any property of the
Company, which results from or arises out of the condition, use or operation of
the Aircraft during the
-22-
Term, including, without limitation, any latent or patent defect whether or not
discoverable.
ARTICLE 8.
TRANSACTION COSTS
Section 8.01. Transaction Costs and Other Costs.
(a) Transaction Costs. The Company shall pay all fees and expenses
of the following persons relating to the offering of the Pass-Through
Certificates contemplated by the Placement Agreement and related to the
transactions contemplated hereby: (i) the reasonable fees and expenses of the
respective counsel for the Company, the Indenture Trustee, the Subordination
Agents, the Pass-Through Trustee, each Liquidity Provider and the Placement
Agents (other than those fees, expenses and disbursements payable by the
Placement Agent pursuant to the Placement Agreement); (iii) the reasonable fees
and expenses of special aviation counsel; (iv) any initial fees and expenses of
the Pass-Through Trustee and each Liquidity Provider and the fees and expenses
of the Subordination Agent and the Indenture Trustee; (v) any compensation,
commissions and discounts payable to the Placement Agents pursuant to the
Placement Agreement; (vi) the fees and expenses incurred in connection with
printing any offering memorandum for the offering of the Pass-Through
Certificates and; (vii) the fees and expenses of Xxxxx'x and S&P; (viii) the
fees and expenses of The Seabury Group LLC;
(b) Continuing Expenses. The Company agrees to pay (i) the
continuing fees, expenses and disbursements (including reasonable counsel fees
and expenses) of the Indenture Trustee, with respect to the administration of
the Trust Indenture Estate; (ii) the continuing fees, expenses and disbursements
(including reasonable counsel fees and expenses) of the Pass-Through Trustee and
the Subordination Agent; and (iv) the continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the Liquidity
Providers as expressly provided in each Liquidity Facility.
(c) Amendments and Supplements. Without limitation of the foregoing,
the Company agrees to pay, to the Indenture Trustee, the Subordination Agent,
the Liquidity Providers and the Pass-Through Trustee all costs and expenses
(including reasonable legal fees and expenses) incurred by any of them in
connection with any amendment, supplement, waiver or consent (whether or not
entered into) under this Agreement or any other Operative Agreement or document
or instrument delivered pursuant to any of them, which amendment, supplement,
waiver or consent is required by any provision of any Operative Agreement or is
requested by the Company or necessitated by the action or inaction of the
Company.
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ARTICLE 9.
[RESERVED]
ARTICLE 10.
LIABILITIES AND INTERESTS OF HOLDERS
Section 10.01. Interest of Holders of Equipment Notes. Each Holder
of an Equipment Note shall have no further interest in, or other right with
respect to, the Trust Indenture Estate when and if the principal and interest on
all Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Certificates shall have
been paid in full.
ARTICLE 11.
OTHER DOCUMENTS
Section 11.01. Consent of Company to Other Documents. The Company
hereby consents in all respects to the execution and delivery of the
Intercreditor Agreement and the Liquidity Facilities.
Section 11.02. Pass-Through Trustee's and Subordination Agent's
Acknowledgment. The Pass-Through Trustee and the Subordination Agent hereby
acknowledge and agree to be bound by all of the terms and conditions of the
Indenture.
ARTICLE 12.
NOTICES
Section 12.01. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the appropriate
telephonic confirmation received if transmitted on a Business Day and during
normal business hours of the recipient, and otherwise on the next Business Day
following transmission, or (b) if given by certified mail, return receipt
requested, by courier service, or by any other commercially customary means,
when received or personally delivered, addressed:
(a) if to the Company, to its office at 000 X. Xxxxxx Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxx Xxxxxxxx, Attention: General Counsel, telephone (919)
000-0000, facsimile (000) 000-0000; or to such other address as the
Company shall from time to time designate in writing to the Indenture
Trustee;
(b) if to the Indenture Trustee, the Subordination Agent or the
Pass-Through Trustee, to its office at 00 Xxxxx Xxxxxxx Xxxxxx, Mail Code
101-591, Xxxxxxxxx, Xxxxxxxx 00000 Attention: Corporate Trust Department,
telephone (000) 000-0000 facsimile (000) 000-0000; or to such other
address as the
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Indenture Trustee or the Pass-Through Trustee, as the case may be, shall
from time to time designate in writing to the Company; and
(c) if to the Liquidity Provider, to its office at _______________,
or to such other address as a Liquidity Provider shall from time to time
designate in writing to the Company and the Indenture Trustee.
ARTICLE 13.
[RESERVED]
ARTICLE 14.
[RESERVED]
ARTICLE 15.
MISCELLANEOUS
Section 15.01. Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
Section 15.02. No Oral Modifications. Neither this Agreement nor any
of its terms may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to and executed by the Company and the Indenture Trustee. A copy of
each such termination, amendment, supplement, waiver or modification shall also
be delivered to each other party to this Agreement.
The consent of each of the Pass-Through Trustee and the
Subordination Agent, in its capacity as a party to this Agreement and not as a
Holder, shall not be required to modify, amend or supplement this Agreement or
to give any consent, waiver, authorization or approval with respect to this
Agreement under the circumstances in which the consent of the Indenture Trustee
would not be required for such modification, amendment, supplement, consent,
waiver or approval in accordance with Section 6.01(b) of the Indenture, provided
that the Pass-Through Trustee shall be entitled to receive an Opinion of Counsel
(as defined in the Pass-Through Trust Agreement) necessary, in its sole
discretion, to establish that the Indenture Trustee's consent would not be
required under such circumstances.
-25-
Section 15.03. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 15.04. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Company and its
successors and permitted assigns, the Subordination Agent and its successors and
permitted assigns, including without limitation each Holder of a Certificate,
the Indenture Trustee and its successors as Indenture Trustee (and any
additional indenture trustee appointed) under the Indenture and the Pass-Through
Trustee and its successors as Pass-Through Trustee (and any additional
Pass-Through trustee appointed).
Section 15.05. Concerning the Indenture Trustee and the Pass-Through
Trustee. FNBM is entering into this Agreement solely in its capacity (except to
the extent otherwise expressly indicated), as Indenture Trustee under the
Indenture and as Pass-Through Trustee under the Pass-Through Trust Agreement and
as Subordination Agent under the Subordination Agreement, and except as
otherwise expressly provided in this Agreement or in the Indenture or the
Pass-Through Trust Agreement FNBM shall not be personally liable for or on
account of its statements, representations, warranties, covenants or obligations
under this Agreement; provided, however, that FNBM accepts the benefits running
to it under this Agreement, and each agrees that (except as otherwise expressly
provided in this Agreement or any other Operative Agreement to which it is a
party) it shall be liable in its individual capacity for (a) its own gross
negligence or willful misconduct (whether in its capacity as trustee or in its
individual capacity), (b) any breach of representations and warranties or any
breach of covenants made in its individual capacity pursuant to or in connection
with this Agreement or the other Operative Agreements to which it is a party,
(c) the failure to use ordinary care in receiving, handling and disbursing
funds, (d) in the case of the Indenture Trustee, Indenture Trustee's Liens, and
(e) taxes, fees or other charges on, or based on, or measured by, any fees,
commissions or compensation received by it in connection with the transactions
contemplated by the Operative Agreements.
Section 15.06. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 15.07. GOVERNING LAW. THIS AGREEMENT IS BEING DELIVERED IN
THE SATE OF NEW YORK, AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS.
-26-
Section 15.08. Section 1110 Compliance. The parties hereto agree
that the transactions contemplated by the Operative Agreements are expressly
intended to be, shall be, and should be construed so as to be entitled to the
benefits and protection of Section 1110 of the Bankruptcy Code.
Section 15.09. Reliance of Liquidity Providers. Each of the parties
hereto agrees and acknowledges that each Liquidity Provider shall be a third
party beneficiary of each of the representations and warranties made herein by
such party (and of each covenant herein made by such party to each Liquidity
Provider), and that each Liquidity Provider may rely on such representations,
warranties and covenants to the same extent as if such representations,
warranties and covenants were made to such Liquidity Provider directly. The
terms of this Agreement shall inure to the benefit of each Liquidity Provider,
their respective successors and permitted assigns.
* * *
-27-
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers as of the
day and year first written above.
MIDWAY AIRLINES CORPORATION
By: ___________________________
Name:
Title:
THE FIRST NATIONAL BANK OF
MARYLAND, as Indenture Trustee,
Pass-Through Trustee and
Subordination Agent
By: ___________________________
Name:
Title:
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Schedule I
Loan Amounts
Loan Participant Amount
---------------- ------
1998-A1 Pass-Through Trust $______________
1998-B Pass-Through Trust $______________
1998-C Pass-Through Trust $______________
1998-D Pass-Through Trust $______________
[Owned Aircraft
Definitions]
APPENDIX A
DEFINITIONS [N_______]
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (as defined below), unless otherwise
defined in an Operative Agreement or the context thereof shall otherwise
require. In the case of any conflict between the provisions of this Appendix and
the provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean such agreements as amended and supplemented from time to
time, and (ii) references to parties to agreements shall be deemed to include
the successors and permitted assigns of such parties.
"Additional Insureds" means the Indenture Trustee (in its individual and
trust capacities) and each Liquidity Provider.
"Aeronautics Authority" means as of any time of determination, the FAA or
other governmental airworthiness authority having jurisdiction over the Aircraft
or the Airframe and Engines or engines attached thereto under the laws of the
country in which the Airframe is then registered.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling 50% or more of any class of voting securities of such
Person or otherwise controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract or
otherwise.
"After Tax Basis" means a basis such that any payment to be received by a
Person shall be supplemented by a further payment to such Person so that the sum
of the two payments, after deduction of all Taxes (taking into account any
related credits or deductions) resulting from the receipt or accrual of such
payments, shall be equal to the payment to be received.
"Aircraft" means the Airframe together with the Engines, whether or not
any of the Engines may at the time of determination be installed on the Airframe
or installed on any other airframe or on any other aircraft.
"Airframe" means (i) the Canadair Regional Jet Series 200ER aircraft
(excluding the Engines and any other engines which may from time to time be
installed thereon, but including any and all Parts which may from time to time
be incorporated in, installed on or attached to such aircraft, and including any
and all such Parts removed therefrom so long as such removed Parts remain
subject to the Lien of the Indenture) identified by national registration number
and manufacturer's serial number in the Indenture Supplement executed and
delivered on the Delivery Date, so long as a Replacement Airframe shall not have
been substituted therefor pursuant to Section 4.04 of the Indenture, and (ii) a
Replacement Airframe, so long as another Replacement Airframe shall not have
been substituted therefor pursuant to Section 4.04 of the Indenture.
"Applicable Law" means all applicable laws, treaties, judgments, decrees,
injunctions, writs and orders of any court, governmental agency or authority and
rules, regulations, orders, directives, licenses and permits of any governmental
body, instrumentality, agency or authority.
"Average Life Date" means, for any Equipment Note, the date which follows
the prepayment date by a period equal to the Remaining Weighted Average Life of
such Equipment Note.
"Bankruptcy Code" means Title 11 of the United States Code, as amended,
and any successor thereto.
"Business Day" means any day other than a Saturday or Sunday on which
commercial banks are not authorized or required to close in New York City,
Charlotte, North Carolina and the city in the United States in which the office
or agency is maintained by the Pass-Through Trustee for the payment of the
Pass-Through Certificates.
"Citizen of the United States" means a citizen of the United States as
defined in ss. 40102(a)(15) of the Transportation Code, or any analogous part of
any successor or substituted legislation or regulation at the time in effect.
"Class A Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class B Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class C Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
-2-
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any similar legislation of the United States enacted to supersede,
amend, or supplement such Code (and any reference to a provision of the Code
shall refer to any successor provision(s), however designated).
"Commitment" of a Loan Participant shall have the meaning given such term
in Section 2(a) of the Participation Agreement.
"Company" means Midway Airlines Corporation, a Delaware corporation.
"Company Documents" means (x) the Operative Agreements to which the
Company is a party and (y) the Pass-Through Trust Agreements.
"DOT" means the U.S. Department of Transportation or any successor
thereto.
"Debt Rate" means the weighted average (based on Outstanding principal
amount) rate of interest on the Equipment Notes.
"Default" means any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Indenture Event of Default.
"Delivery Date" means the date of the initial Indenture Supplement.
"Deposit Agreement" means each of the four Deposit Agreements between the
Depositary and the Escrow Agent, dated as of the Issuance Date, each of which
relates to one of the Pass-Through Trusts.
"Depositary" means First Union National Bank, as Depositary under each
Deposit Agreement.
"Dollars" means dollars in lawful currency of the United States.
"Downgrade Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Engine" means (A) one of the two CF34-3B1 Series 200 engines identified
by manufacturer's serial number in the Indenture Supplement executed and
delivered on the Delivery Date, so long as a Replacement Engine shall not have
been substituted therefor pursuant to Section 4.03(e) of the Indenture, and (B)
a Replacement Engine, so long as another Replacement Engine shall not have been
substituted therefor pursuant to Section 4.03(e) of the Indenture, whether or
not such engine or Replacement Engine, as the case may be, is from time to time
installed on the Airframe or installed on any other aircraft, and including in
each case all Parts incorporated or installed in or attached thereto and any and
all Parts removed therefrom so long as such Parts remain subject to the Lien of
the Indenture. The term "Engines" means, as of any date of determination, the
two engines each of which is an Engine on that date.
-3-
"Equipment Notes" means the Equipment Notes issued by the Company
pursuant to the Indenture and any equipment note issued in exchange therefor or
replacement thereof pursuant to the Indenture.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means First Union Trust Company, National Association, as
Escrow Agent under each of the Escrow Agreements.
"Escrow Agreement" means each of the four Escrow and Paying Agent
Agreements, among the Escrow Agent, the Paying Agent, certain initial purchasers
of the Pass-Through Certificates named therein and one of the Pass-Through
Trustees, dated as of the Issuance Date, each of which relates to one of the
Pass-Through Trusts.
"Event of Loss" means any of the following events with respect to the
Aircraft, the Airframe or any Engine:
(i) theft or disappearance for a period in excess of 90 consecutive
days;
(ii) destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use for any reason whatsoever;
(iii) any event which results in an insurance settlement with
respect to such property on the basis of an actual, constructive or
compromised total loss;
(iv) condemnation, confiscation or seizure of, or requisition of
title to or use of such property by any foreign government (or in the case
of any such requisition of title, by the Government) or any agency or
instrumentality thereof, for a period in excess of 180 consecutive days
(or 30 consecutive days for the appropriation of title);
(v) condemnation, confiscation or seizure of, or requisition of use
of such property by the Government; and
(vi) as a result of any law, rule, regulation, order or other action
by the Aeronautics Authority, the use of the Aircraft or Airframe in the
normal course of air transportation shall have been prohibited by virtue
of a condition affecting all Canadair Regional Jet Series 200ER aircraft
equipped with engines of the same make and model as the Engines for a
period of 180 consecutive days, unless the Company, prior to the
expiration of such 180-day period, shall be diligently carrying forward
all necessary and desirable steps to permit normal use of the Aircraft and
shall within 12 months have conformed at least one Canadair Regional Jet
Series 200ER aircraft (but not necessarily the Aircraft) to the
requirements of any such law, rule, regulation, order or action, and shall
be diligently pursuing conformance of the Aircraft in a non-discriminatory
manner.
-4-
The date of such Event of Loss shall be (aa) the 91st day following loss of such
property or its use due to theft or disappearance; (bb) the date of any
destruction, damage beyond economic repair or rendition of such property
permanently unfit for normal use; (cc) the date of any insurance settlement on
the basis of an actual, constructive or compromised total loss; (dd) the 181st
day following condemnation, confiscation, seizure or requisition of title to or
use of such property by a foreign government referred to in clause (iv) above
(or the 31st day in the case of appropriation of title; (ee) the 181st day
following requisition of title to or use of such property by the Government; and
(ff) the last day of the applicable period referred to in clause (vi) above. An
Event of Loss with respect to the Aircraft shall be deemed to have occurred if
any Event of Loss occurs with respect to the Airframe.
"Expenses" has the meaning given to such term in Section 7.01(a) of the
Participation Agreement.
"Federal Aviation Administration" or "FAA" means the United States Federal
Aviation Administration and any successor agency or agencies thereto.
"Final Drawing" has the meaning given to such term in Section 1.01 of the
Intercreditor Agreement.
"FNBM" means The First National Bank of Maryland, a national banking
association.
"Government" means the United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
"Holder" means, as of any particular time, the Person in whose name a
Equipment Note shall be registered.
"Indemnitee" means each of the Subordination Agent, in its individual
capacity and in its capacity as Subordination Agent, each Liquidity Provider,
the Indenture Trustee, in its individual capacity and as trustee, the Escrow
Agent, the Paying Agent, the Pass-Through Trustees and each Affiliate, officer,
director, employee, agent and servant of any of the foregoing Persons. No holder
of a Pass-Through Certificate shall be deemed to be an Indemnitee.
"Indenture" means the Trust Indenture and Security Agreement [N_____],
dated as of ______________ __, 199_, between the Company and the Indenture
Trustee.
"Indenture Default" means any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
"Indenture Event of Default" means each of the events specified in Section
7.01 of the Indenture.
-5-
"Indenture Indemnitee" means (i) the Indenture Trustee and each separate
or additional trustee appointed pursuant to the Indenture, (ii) the Escrow
Agent, (iii) the Subordination Agent, (iv) each Liquidity Provider, (v) the
Paying Agent, (vi) each Pass-Through Trustee and (vii) each of the respective
directors, officers, employees, agents and servants of each of the persons
described in clauses (i) through (vi).
"Indenture Supplement" means (a) the Trust Indenture and Security
Agreement Supplement No. 1, substantially in the form of Exhibit A to the
Indenture, which shall describe with particularity the Aircraft covered by the
Indenture, and which creates a first priority security interest in the Aircraft
and (b) any other supplement to the Indenture from time to time executed and
delivered.
"Indenture Trustee" means The First National Bank of Maryland, a national
banking association, as indenture trustee under the Operative Documents.
"Indenture Trustee's Liens" means any Lien against, on or with respect to
the Aircraft, any Engine, or the Trust Indenture Estate or any part thereof
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to the
Indenture or any document included in the Trust Indenture Estate, (ii) any act
or omission of the Indenture Trustee which is not related to the transactions
contemplated by the Operative Agreements or is in violation of any of the terms
of the Operative Agreements, or (iii) Taxes imposed against the Indenture
Trustee in its individual capacity in respect of which the Company has not
indemnified (and is not obligated to indemnify) the Indenture Trustee in such
capacity.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Indenture Trustee that is
independent in fact, does not have any direct financial interests, or any
material indirect financial interest, in the Indenture Trustee or any Affiliate
of the Indenture Trustee, and is not connected with the Indenture Trustee or any
Affiliate of the Indenture Trustee, as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions;
provided, that if the Indenture Trustee shall not have received written notice
of such an appointment at least 10 days prior to the Prepayment Date,
"Independent Investment Banker" shall mean such an institution appointed by the
Indenture Trustee.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
August 13, 1998, among the Pass-Through Trustees, the Class A Liquidity
Provider, the Class B Liquidity Provider, the Class C Liquidity Provider and the
Subordination Agent.
"Interest Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Issuance Date" means August 13, 1998.
-6-
"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
security interest, claim, or other similar interest of any nature whatsoever.
"Liquidity Facility" means each of the three Irrevocable Revolving Credit
Agreements (consisting of a separate Revolving Credit Agreement with the
Liquidity Provider with respect to each Pass-Through Trust) between the
Subordination Agent, as borrower, and the Liquidity Provider, each dated as of
the Issuance Date.
"Liquidity Provider" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Loan Participant" means and includes each registered holder from time to
time of an Equipment Note issued under the Indenture including, so long as it
holds any Equipment Notes issued under the Indenture, the Pass-Through Trustee
under each Pass-Through Trust Agreement.
"Majority in Interest of Holders" means, as of a particular date of
determination, the Holders of more than 50% of the aggregate unpaid principal
amount of all Equipment Notes Outstanding as of such date.
"Make-Whole Premium" means with respect to any Equipment Note, an amount
determined as of the day before the applicable Prepayment Date (or date of
purchase, as the case may be) which an Independent Investment Banker determines
to be equal to the excess, if any, of (i) the present value of the remaining
scheduled payments of such principal amount or portion thereof and interest
thereon to the maturity date of such Equipment Note assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield (in the case of the Series A Equipment Notes and Series B Equipment Notes)
and the Treasury Yield plus .50% (in the case of the Series C Equipment Notes
and the Series D Equipment Notes) over (ii) the outstanding principal amount of
such Equipment Note plus accrued interest (other than any overdue portion
thereof).
"Manufacturer" means Bombardier, Inc., a Canadian corporation.
"Minimum Liability Amount" has the meaning given to such term in Exhibit B
to the Participation Agreement.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Note Purchase Agreement" means the Note Purchase Agreement, dated as of
the Issuance Date, among the Company, the Subordination Agent, the Escrow Agent,
the Paying Agent and the Pass-Through Trustee under each Pass-Through Trust
Agreement providing for, among other things, the issuance and sale of certain
equipment notes.
-7-
"Offering Memo" means the Company's August 6, 1998 Offering Memorandum
concerning the Pass-Through Certificates.
"Officer's Certificate" means, when delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Company and delivered to the
Indenture Trustee. Each such certificate shall include the statements provided
for in Section 15.07 of the Indenture.
"Operative Agreements" means the Participation Agreement, the Equipment
Notes outstanding at the time of reference, the Indenture and each Indenture
Supplement.
"Opinion of Counsel" means when delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the Company
may be (i) an attorney employed by the Company who is generally empowered to
deliver such written opinions, (ii) Fulbright & Xxxxxxxx L.L.P., or (iii) other
counsel designated by the Company and reasonably satisfactory to the Indenture
Trustee, and (b) for the Indenture Trustee, an attorney selected by such Person
and reasonably satisfactory to the Company.
"Outstanding" means, when used with respect to Equipment Notes, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Equipment Notes theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Equipment Notes theretofore canceled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Equipment Notes for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee in
trust for the Holders of such Equipment Notes pursuant to Section
14.01 of the Indenture; provided that if such Equipment Notes are to
be prepaid, notice of such prepayment has been duly given pursuant
to the Indenture or provision therefor satisfactory to the Indenture
Trustee has been made; and
(iii) Equipment Notes in exchange for or in lieu of which other
Equipment Notes have been executed and delivered pursuant to Article
II of the Indenture.
"Participants" means, collectively, the Pass-Through Trustee with respect
to each of the Pass-Through Trust Agreements; "Participant" means, individually,
one of the Participants.
-8-
"Participation Agreement" the Participation Agreement [N _____], dated as
of__________ __,199__, among the Company, the Indenture Trustee, the
Pass-Through Trustees and the Subordination Agent.
"Parts" means any and all appliances, parts, instruments, appurtenances,
accessories, furnishings, seats, and other equipment of whatever nature (other
than Engines or engines and temporary replacement parts as provided in Section
4.04 of the Indenture and cargo containers) which may from time to time be
incorporated or installed in or attached to any Airframe or any Engine,
exclusive of any items leased by the Company from third parties and not required
in the navigation of the Aircraft.
"Pass-Through Certificates" means any of the Pass-Through Certificates,
1998-1A, the Pass-Through Certificates, 1998-1B, the Pass-Through Certificates,
1998-1C or the Pass-Through Certificates, 1998-1D, in each case as issued by the
related Pass-Through Trust; and "Pass-Through Certificates" means all of such
Pass-Through Certificates.
"Pass-Through Documents" means the Pass-Through Trust Agreements, the
Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement and
the Liquidity Facilities.
"Pass-Through Trust" means the Midway Airlines 1998-1 Pass-Through Trust
Class A, Midway Airlines 1998-1 Pass-Through Trust Class B, Midway Airlines
1998-1 Pass-Through Trust Class C and Midway Airlines 1998-1 Pass-Through
Trust-Class D, in each case formed pursuant to the related Series Supplement in
accordance with the Pass-Through Trust Agreement; and "Pass-Through Trusts"
means all of such Pass-Through Trusts.
"Pass-Through Trust Agreement" means each of the four Pass-Through Trust
Agreements dated as of August 13, 1998 among the Company and the Pass-Through
Trustee (which shall include each Successor Pass-Through Trust Agreement entered
into pursuant to Section 11.01 of each thereof).
"Pass-Through Trustee" The First National Bank of Maryland, a national
banking association, in its capacity as Pass-Through Trustee under each
Pass-Through Trust Agreement.
"Past Due Rate" means in respect of any principal of or interest on or any
other amounts payable in respect of any Equipment Note that is not paid when due
to any Holder, a rate per annum during the period from and including the due
date to but excluding the date on which such amount is paid in full equal to 1%
plus the interest rate applicable to such Equipment Note.
"Payment Date" means each January 2 and July 2, commencing on _________ 2,
199__.
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"Permitted Air Carrier" means (a) any Section 1110 Person and (b) any
foreign air carrier that is principally based in any foreign country listed on
Exhibit C to the Indenture, except those that do not maintain normal diplomatic
relations with the United States.
"Permitted Investments" means (a) direct obligations of the United States
of America or any agency or instrumentality thereof, (b) obligations fully
guaranteed by the United States of America or any agency or instrumentality
thereof, (c) any mutual fund the portfolio of which is limited to obligations of
the type described in clauses (a) and (b), including any proprietary mutual fund
of The First National Bank of Maryland for which such bank or an affiliate is
investment advisor or to which such bank provides other services and receives
reasonable compensation for such services, (d) certificates of deposit issued
by, or bankers' acceptances of, or time deposits or a deposit account with, any
bank, trust company, or national banking association incorporated or doing
business under the laws of the United States of America or one of the states
thereof, having a combined capital and surplus of at least $100,000,000 and
having a rating of "A" or better from the Xxxxx Bank Watch Service, (e)
commercial paper issued by companies in the United States which directly issue
their own commercial paper and which are doing business under the laws of the
United States of America or one of the states thereof and in each case having a
rating assigned to such commercial paper by a nationally recognized rating
organization in the United States of America equal to the highest rating
assigned by such organization, or (f) obligations of the type described in
clauses (a), (b), (d), or (e) above, purchased from any bank, trust company, or
banking association referred to in clause (d) above pursuant to repurchase
agreements obligating such bank, trust company, or banking association to
repurchase any such obligation not later than 30 days after the purchase of any
such obligation. Unless otherwise specified in writing by the Company, all such
Permitted Investments shall mature not later than 30 days from the date of
purchase.
"Permitted Lien" has the meaning given to such term in Section 4.06 of the
Indenture.
"Permitted Lessee" means (a) any Permitted Air Carrier or (b) any airframe
or engine manufacturer, or Affiliate of such a manufacturer, who is domiciled in
the United States of America or a country listed on Exhibit C to the Indenture.
"Person" means any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
"Placement Agents" means Xxxxxx Xxxxxxx & Co. Incorporated and Credit
Suisse First Boston.
"Placement Agreement" means the Purchase Agreement dated August 6, 1998
among the Company and the Placement Agents.
-10-
"Prepayment Date" has the meaning given to such term in Section 6.02(b) of
the Indenture.
"Prepayment Price" has the meaning given to such term in Section 6.02(b)
of the Indenture.
"Purchase Agreement" means Bombardier Regional Aircraft Division Purchase
Agreement No. PA-0393 dated September 17, 1997, as amended, between the Company
and the Manufacturer (including all exhibits thereto, together with all letter
agreements entered into that by their terms constitute part of any such Purchase
Agreement).
"Rating Agency" means Moody's or S&P, as the context requires.
"Record Date" means, with respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 15 for January 2
Payment Dates and June 15 for July 2 Payment Dates, whether or not such date is
a Business Day.
"Register" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registrar" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registration Rights Agreement" means the Exchange and Registration Rights
Agreement, dated as of August 13, 1998, among the Placement Agents, FNBM, as
Pass-Through Trustee, and the Company.
"Registration Rights Event" has the meaning given to such term in the
Registration Rights Agreement.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and supplemented
and in effect from time to time.
"Remaining Weighted Average Life" means on a given date with respect to
any Equipment Note the number of days equal to the quotient obtained by dividing
(i) the sum of each of the products obtained by multiplying (a) the amount of
each then remaining scheduled payment of principal of such Equipment Note by (b)
the number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Equipment Note.
"Replacement Aircraft" means any Aircraft of which a Replacement Airframe
is part.
"Replacement Airframe" means a Canadair Regional Jet Series 200ER series
aircraft or a comparable or improved model of such aircraft of the Manufacturer
(except
-11-
Engines or engines from time to time installed thereon) which shall have become
subject to the Indenture pursuant to Section 4.04 thereof.
"Replacement Engine" means a CF34-3B1 Series 200 engine (or engine of the
same or another manufacturer of a comparable or an improved model and suitable
for installation and use on the Airframe), and which shall have become subject
to the Indenture pursuant to Section 4.03(e) thereof.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer in its Corporate Trust Administration, as the case may be, designated by
such Person to perform obligations under the Operative Agreements, and with
respect to any other party, any corporate officer of a party who, in the normal
performance of his or her operational responsibilities, with respect to the
subject matter of any covenant, agreement or obligation of such party pursuant
to any Operative Agreement, would have responsibility for and knowledge of such
matter and the requirements of any Operative Agreement with respect thereto.
"S&P" means Standard & Poor's Ratings Group.
"SEC" means the Securities and Exchange Commission of the United States
and any successor agencies or authorities.
"Section 1110 Person" means a Citizen of the United States who is an air
carrier holding a valid air carrier operating certificate issued pursuant to 49
U.S.C. ch. 447 for aircraft capable of carrying 10 or more individuals.
"Secured Obligations" has the meaning specified in the Granting Clause of
the Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Series "A" or "Series A Equipment Notes" means the Equipment Notes issued
and designated as "Series A" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series A".
"Series "B" or "Series B Equipment Notes" means the Equipment Notes issued
and designated as "Series B" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series B".
"Series "C" or "Series C Equipment Notes" means the Equipment Notes issued
and designated as "Series C" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series C".
-12-
"Series "D" or "Series D Equipment Notes" means the Equipment Notes issued
and designated as "Series D" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series D".
"Specified Default" means (a) an event or condition described in Section
7.01(i), (iv), (v) and (vi) of the Indenture that, after the giving of notice or
lapse of time, or both, would mature into an Indenture Event of Default, or (b)
any Indenture Event of Default.
"Specified Investments" means (a) direct obligations of the United States
of America or obligations fully guaranteed by the United States of America; (b)
any mutual fund the portfolio of which is limited to obligations of the type
described in clause (a), including any proprietary mutual fund of The First
National Bank of Maryland for which such bank or an affiliate is investment
advisor or to which such bank provides other services and receives reasonable
compensation for such services; (c) commercial paper rated A-1/P-1 by S&P and
Moody's, respectively or, if such ratings are unavailable, rated by any
nationally recognized rating organization in the United States equal to the
highest rating assigned by such rating organization; (d) investments in
negotiable certificates of deposit, time deposits, banker's acceptances,
commercial paper or other direct obligations of, or obligations guaranteed by,
commercial banks organized under the laws of the United States or of any
political subdivision thereof (or any U.S. branch of a foreign bank) with issuer
ratings of at least B/C by Thomson Bankwatch, having maturities no later than 90
days following the date of such investment; (e) overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers; or (f) overnight repurchase agreements with respect to the
securities described in clause (a) above entered into with an office of a bank
or trust company which is located in the United States of America or any bank or
trust company which is organized under the laws of the United States or any
state thereof and has capital, surplus and undivided profits aggregating at
least $500 million.
"Subordination Agent" means The First National Bank of Maryland, a
national banking association, in its capacity as Subordination Agent.
"Transaction Costs" means those costs and expenses set forth in Section
8.01(a) of the Participation Agreement to be borne by the Company.
"Transportation Code" means Title 49 of the United States Code, subtitle
VII, as amended and in effect on the date of the Indenture or as subsequently
amended, or any successor or substituted legislation at the time in effect and
applicable, and the regulations promulgated pursuant thereto.
"Treasury Yield" means, at the time of determination with respect to any
Equipment Note, the interest rate (expressed as a semi-annual equivalent and as
a decimal and, in the case of United States Treasury bills, converted to a bond
equivalent
-13-
yield) determined to be the per annum rate equal to the semi-annual yield to
maturity for United States Treasury securities maturing on the Average Life Date
on such Equipment Note and trading in the public securities markets either as
determined by interpolation between the most recent weekly average yield to
maturity for two series of United States Treasury securities, trading in public
securities markets, (i) one maturing as close as possible to, but earlier than,
the Average Life Date of such Certificate and (ii) the other maturing as close
as possible to, but later than, the Average Life Date of such Equipment Note, in
each case as published in the most recent H.15(519) or, if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Equipment Note is reported on the most recent H.15(519), such
weekly average yield to maturity as published in such H.15(519). "H.15(519)"
means the weekly statistical release designated as such, or any successor
publication, published by the Board of Governors of the Federal Reserve System.
The date of determination of a Make-Whole Premium will be the third Business Day
prior to the applicable prepayment date and the "most recent H.15(519)" means
the H.15(519) published prior to the close of business on the third Business
Day prior to the applicable prepayment date.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Trust Indenture Estate" means all estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interest, and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments.
"United States", "U.S." or "US" means the United States of America.
-14-
Exhibit A-1(a) to
Owned Aircraft
Participation Agreement
[Midway Owned Aircraft Opinion]
[SUBJECT TO REVIEW BY MIDWAY GENERAL COUNSEL]
[Delivery Date]
To Each of the Parties Named
on the Attached Schedule
Re: Financing of One Canadair Regional
Jet Series 200ER Aircraft Bearing
U.S. Registration No. N______
Ladies and Gentlemen:
I am General Counsel for Midway Airlines Corporation, a Delaware
corporation (the "Company"), and have acted as counsel for the Company in
connection with the transactions contemplated by the Participation Agreement
dated as of _________, between the Company and The First National Bank of
Maryland, as Indenture Trustee, Pass Through Trustee and Subordination Agent.
This opinion is being delivered pursuant to Section 3.01(b)(viii)(A)(I) of
the Participation Agreement. Capitalized terms not defined herein are used as
defined in the Participation Agreement.
In connection with the opinions expressed below, I, or counsel under my
supervision in the office of the General Counsel of the Company, have examined
the Participation Agreement, the Purchase Agreement Assignment, the Indenture
and the Indenture Supplement covering the Aircraft (the "Company's Agreements").
In addition we have reviewed the other Operative Documents. In arriving at the
opinions expressed below, I have assumed (except as to the Company) the
genuineness of all signatures and the due authorization, execution and delivery
by the parties thereto of the Company's Agreements and that each such party has
full power and authority to perform its obligations thereunder. I have examined
and relied without independent verification on the representations and
warranties by parties other than the Company as to factual matters contained in
or made pursuant to the Company's Agreements. In addition, I have examined
originals or copies certified to my satisfaction, of such other
agreements, documents, certificates and statements of government officials and
other papers as I have deemed necessary or advisable as a basis for such
opinions.
Based upon the foregoing, I am of the opinion that:
1. The Company is a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware and has the corporate
power and authority to own or hold under lease its properties and conduct its
business as presently conducted and to enter into and perform its obligations
under the Company's Agreements. The Company is an "air carrier" within the
meaning of the Transportation Code and a holder of a certificate under Section
41102(a) of the Transportation Code and a "citizen of the United States" within
the meaning of Section 40102(a)(15) of the Transportation Code holding an "air
carrier operating certificate" issued under Chapter 447 of the Transportation
Code for aircraft capable of carrying ten or more individuals or 6,000 pounds or
more of cargo, and each such certificate is in full force and effect. The
Company is duly qualified to do business as a foreign corporation and in good
standing in each jurisdiction where the activities of the Company require such
qualification except where the failure to so qualify would not have a material
adverse effect on the Company or the ability of the Company to perform its
obligations under the Company's Agreements. The Company's chief executive office
(as such term is defined in the Uniform Commercial Code as in effect in the
State of North Carolina) is at 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx
Xxxxxxxx 00000.
2. The execution, delivery and performance by the Company of the Company's
Agreements do not require the approval or consent of, or the giving of notice
to, any trustee, stockholders or holders of any indebtedness or obligations of
the Company (except for such consents or approvals as have been obtained on or
prior to the Delivery Date), and neither the execution and delivery by the
Company thereof nor the performance by the Company of the transactions
contemplated thereby nor compliance by the Company with any of the terms and
provisions thereof will contravene any applicable law of the State of Delaware
or the United States of America applicable to or binding upon the Company (other
than the securities or Blue Sky laws of the various states, as to which I
express no opinion), or any of its properties, or contravene or result in any
breach of, or constitute any default under or result in the creation of any Lien
(other than as permitted under the Operative Documents) upon any property of the
Company under any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract bank loan or credit agreement, corporate charter,
bylaw or other agreement, or instrument to which the Company is a party or by
which the Company or any of its property may be bound or affected (except for
such conflicts, breaches or defaults or liens, charges or encumbrances, that,
singly or in the aggregate, would not have material adverse effect on the
Company's ability to perform its obligations under the Company's Agreements).
3. The execution, delivery and performance of the Company's Agreements
have been duly authorized by all necessary corporate action on the part of the
-2-
Company, and the Company's Agreements have been duly executed and delivered by
the Company.
4. Except for the filings of the Uniform Commercial Code financing
statements on the Delivery Date, the execution and delivery by the Company of
the Company's Agreements and the consummation by the Company of the transactions
contemplated thereby do not require the consent or approval of, or the giving of
notice to, or the registration, recording or filing of any document with, or the
taking of any other action with respect to any authority or agency of the State
of North Carolina.(*)
5. The Uniform Commercial Code financing statements referred to in Section
___ of the Participation Agreement have been filed with the Office of the
Secretary of State of North Carolina.(*)
6. There are no pending or, to our knowledge, threatened actions, suits,
or proceedings before any court or administrative agency or arbitration against
the Company or involving the Company that question the validity of any of the
Company's Agreements or that is required to have been disclosed in the Company's
Annual Report on Form 10-K filed for the year ended ___________________, or any
subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K, except
such as are therein disclosed.
No opinion is expressed herein as to state securities laws or other laws
other than the General Corporation Law of the State of Delaware [, the laws of
the State of North Carolina](*) and the federal laws of the United States.
This opinion is furnished by me as counsel to the Company to you as
parties to the Participation Agreement and is solely for your benefit.
Very truly yours,
----------
(*) The opinions in paragraphs 4 and 5 will be delivered by a North Carolina
law firm in a legal opinion subject to customary qualifications.
-3-
Schedule of Addresses
The First National Bank of Maryland,
as Indenture Trustee, Pass Through
Trustee and Subordination Agent
ABN AMRO Bank N.V.
Standard & Poor's Rating Services
Exhibit A-1(b) to
Leased Aircraft
Participation Agreement
[LETTERHEAD OF XXXXXXX XXXXXXXXX XXXXXXX & XXXXXXX, L.L.P.]
[Date]
To Each of the Parties Named
on the Attached Schedule
Re: Midway Airlines Corporation Participation Agreement N[__]
Ladies and Gentlemen:
We have acted as special North Carolina counsel to Midway Airlines
Corporation, a Delaware corporation (the "Company"), in connection with the
transactions contemplated by the Participation Agreement, dated as of [________
___, _______] (the "Participation Agreement"), among the Company and The First
National Bank of Maryland, as Indenture Trustee, Pass Through Trustee and
Subordination Agent, and the other parties named therein. This opinion is being
delivered pursuant to Section 3.01(b)(xviii)(A)(II) of the Participation
Agreement. Capitalized terms not defined herein are used as defined in the
Participation Agreement.
In connection with the opinion expressed below, we have examined
originals, or copies certified to our satisfaction, of the Participation
Agreement, the Trust Agreements and the Pass Through Trust Agreements (the
"Agreements"). In addition, we have reviewed originals, or copies certified to
our satisfaction, of the Indenture and the other Operative Documents executed
and delivered on the date hereof. In arriving at the opinion expressed below, we
have assumed the genuineness of all signatures and the due authorization,
execution and delivery by the parties thereto of the Agreements and that each
such party has the full power and authority to perform its obligations
thereunder. We have examined and relied without independent verification on the
representations and warranties by the parties as to factual matters contained in
or made pursuant to the Agreements. In addition, we have examined originals, or
copies certified to our satisfaction, of such other agreements, documents,
certificates and statements of government officials and other papers as we have
deemed necessary or advisable as a basis for such opinion.
With your permission, we have made the following factual assumptions for
purposes of this opinion:
To Each of the Parties Named on the Attached Schedule
[date]
Page 2
1. The Company is in compliance with all federal and state laws and
regulations (other than the laws and regulations of the State of
North Carolina) relating to the execution and delivery by the
Company of the Documents and the consumption by the Company of the
transactions contemplated thereby.
2. Prior to the date hereof, the Company has been in compliance with
all North Carolina laws and regulations governing its operations.
Based upon the foregoing and subject to the qualifications set forth
below, we are of the opinion that (a) the Uniform Commercial Code financing
statements required to be filed in North Carolina on the Delivery Date pursuant
to Section 3.01(m) of the Participation Agreements have been duly filed and (b)
the execution and delivery by the Company of the Documents and the consummation
by the Company of the transactions contemplated thereby do not require the
consent or approval of, or the giving of notice to, or the registration,
recording or filing of any document with, or the taking of any other action with
respect to any authority or agency of the State of North Carolina.
The opinion expressed herein is limited to matters governed by the laws of
the State of North Carolina. You have not requested any opinion from us nor do
we express any opinion, concerning: (i) North Carolina state securities laws,
(ii) the North Carolina state tax implications of the issuance or the holding of
any Certificates or the underlying notes, (iii) the priority of any liens on any
portion of the Trust Estate or proceeds thereof, or (iv) the consequences of any
insolvency proceedings with respect for the Company.
This opinion letter is rendered only as of the date hereof. We undertake
no obligation to update this opinion letter after the date hereof or to give
notice as to any future changes of facts or law that might affect the opinions
set forth herein. This opinion letter is limited to the matters expressly stated
herein, and no other opinion shall be implied or inferred herefrom.
We have provided this opinion letter to the addressees in our capacity as
special counsel to the Company in connection with the transactions contemplated
by the Participation Agreements. This opinion letter is solely for your use and
may not be relied upon for any other purpose or by any other person without our
prior written consent.
Very truly yours,
Exhibit A-2 to
Owned Aircraft
Participation Agreement
[F&J OWNED AIRCRAFT OPINION]
[Delivery Date]
To Each of the Parties Listed
on the Attached Schedule
Re: Financing of One Canadair Regional Jet
Series 200ER Aircraft -- U.S. Registration No. N_____
Ladies and Gentlemen:
We have acted as special New York counsel for Midway Airlines Corporation,
a Delaware corporation (the "Company"), in connection with the Participation
Agreement dated as of _________________, among the Company; and The First
National Bank of Maryland ("FNBM"), as Indenture Trustee, Pass Through Trustee
and Subordination Agent. Capitalized terms used herein and not otherwise defined
herein shall have the meanings set forth or referred to in the Participation
Agreement. For purposes hereof, "Documents" shall be a collective reference to
the Participation Agreement, the Indenture, Indenture Supplement No. 1 and the
Equipment Notes.
This opinion is furnished to you pursuant to Section 3.01(b)(viii)(B) of
the Participation Agreement.
In rendering this opinion, we have examined the Documents and such other
Operative Documents as are necessary in order to give the opinions expressed
herein. We have further examined and relied upon the accuracy of original,
certified, conformed, photographic or telecopied copies of such records,
agreements, certificates, certificates of public officials and such other
documents, and have made an investigation of such laws, as we have deemed
necessary and appropriate for the purpose of rendering this opinion. As to
certain questions of fact material to our opinions, we have relied solely upon
the accuracy of the statements, representations and warranties made in the
Documents and such other Operative Documents and we have made no independent
investigation or inquiry with respect to such factual matters.
Based on the foregoing and upon an examination of such questions of law as
we have considered necessary or appropriate, and subject to the assumptions,
exceptions, qualifications and limitations set forth below, we advise you that
in our opinion:
1. Each of the Documents constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.
The Equipment Notes are entitled to the benefits of the Indenture.
2. The execution and delivery by the Company of the Documents, the
consummation by the Company of the transactions contemplated thereby and the
compliance by the Company with any of the terms and provisions thereof do not
contravene any applicable federal law of the United States or any applicable law
of New York.
3. Except for the filings with the FAA referred to in paragraph 4 below,
the execution and delivery by the Company of the Documents and the consummation
by the Company of the transactions contemplated thereby do not require the
consent or approval of, or the giving of notice to, or the registration,
recording or filing of any document with, or the taking of any other action with
respect to any authority or agency of the federal government of the United
States of America or the State of New York.
4. The Indenture as supplemented by Indenture Supplement No. 1 thereto is
in due form for filing in accordance with Subtitle VII of Title 49 of the United
States Code (the "Act"), and will create, for the benefit of the Indenture
Trustee, a valid security interest in the Indenture Estate identified therein.
Except for the filings with the FAA referred to in the opinion dated today and
addressed to you of Xxxxx & Xxxxxxx, the filing of the Uniform Commercial Code
financing statements referenced in Section _______ of the Participation
Agreement, which filings we assume have been duly effected and are adequate for
their intended purpose (and subject to the timely filings in the future of
continuation statements with respect to such financing statements), no recording
or filing in the United States of America of any of the Operative Documents, nor
any other action, is necessary or advisable in order to establish and perfect in
the United States of America, the mortgage and security interest of the
Indenture Trustee under the Indenture on the Aircraft or the other property
included in the Indenture Estate in favor of the Indenture Trustee as against
the Company or any third party.
5. The Participation Agreement and the Indenture (the "Indenture Trustee
Documents") constitute legal, valid and binding obligations of the Indenture
Trustee, enforceable against the Indenture Trustee in accordance with their
respective terms.
6. The Participation Agreement constitutes the legal, valid and binding
obligation of the Pass Through Trustee, enforceable against the Pass Through
Trustee in accordance with its terms.
7. The Participation Agreement constitutes the legal, valid and binding
obligation of the Subordination Agent, enforceable against the Subordination
Agent in accordance with its terms.
-2-
8. So long as the Company continues to be a "citizen of the United
States," as defined in Section 40102 of Title 49 of the United States Code,
holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49 of the United States Code for
aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of
cargo, the Indenture Trustee, would be entitled to the benefits of Section 1110
of the Bankruptcy Code ("Section 1110") with respect to the Aircraft.
We call your attention that the U.S. District Court for the District of
Colorado recently issued an opinion regarding Section 1110, In re Western
Pacific Airlines, Civil Action No. 98-K-358 (D. Cob. Mar. 10 and affirmed on
rehearing May 1, 1998). The decision, reversing an order of the bankruptcy
court, held that, although an airline debtor reaffirms its obligations and cures
its defaults under an aircraft lease within the prescribed period in accordance
with Section 1110, the protections under Section 1110 will cease after the first
sixty days in a chapter 11 case. An appeal from the decision of the District
Court is pending in the Court of Appeals for the Tenth Circuit. We have filed a
brief in the Tenth Circuit on behalf of another client seeking to overturn the
District Court's ruling. Although we are of the opinion that the decision of the
District Court was in error and that the protections of Section 1110, generally
speaking, should continue after the first sixty days in chapter 11, we can give
no assurance that the decision of the District Court will be reversed.
The foregoing opinions are subject to the following assumptions,
exceptions, qualifications and limitations:
A. The foregoing opinions are expressly limited to matters under and
governed by the internal laws of the State of New York and applicable federal
laws of the United States of America, except that we express no opinion as to
the securities law of any state, including the State of New York. Our opinion in
paragraph 2 above as to the contravention of certain laws, rules and regulations
is based upon such examination of laws and regulations as in our judgment was
necessary and appropriate for the purpose of such opinion.
B. The foregoing opinions regarding the enforceability of the Operative
Documents against any of the parties thereto are subject to the following:
(i) The enforceability of any of the Operative Documents may be limited
or affected by (a) bankruptcy, insolvency, reorganization,
moratorium, liquidation, rearrangement, probate, conservatorship,
fraudulent transfer, fraudulent conveyance and other similar laws
(including court decisions) now or hereafter in effect and affecting
the rights and remedies of creditors generally or providing for the
relief of debtors, (b) the refusal of a particular court to grant
(1) equitable remedies, including, without limiting the generality
of the foregoing, specific performance and injunctive relief or (2)
a particular remedy sought by the Indenture Trustee under the
-3-
Indenture as opposed to another remedy provided for therein or
another remedy available at law or in equity, but which does not in
our opinion make such remedies inadequate for the practical
realization of the benefits intended to be provided thereby and (c)
general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
(ii) In rendering the foregoing opinions, we express no opinion as to the
enforceability of provisions of any of the Operative Documents (a)
purporting to waive or affect rights, claims, defenses or other
benefits bestowed by law, including without limitation the right to
receive notices, to the extent that any of the same cannot be waived
or affected or (b) relating to indemnities to the extent prohibited
by public policy or limited by federal or state securities laws or
which might require indemnification for losses or expenses caused by
gross negligence, willful misconduct, fraud or illegality of an
indemnified party, the rights of third parties, or the exercise of
rights and remedies with respect to the Aircraft other than in a
commercially reasonable manner or as otherwise provided in the
Uniform Commercial Code or other applicable law.
(iii) We note that the enforceability of specific provisions of the
Operative Documents may be subject to standards of reasonableness,
care and diligence and "good faith" limitations and obligations such
as those provided in Sections 1-102(3) and 1-203, of the Uniform
Commercial Code and similar applicable principles of common law and
judicial decisions.
(iv) We express no opinion with respect to compliance with the anti-fraud
provisions of applicable federal rules or regulations.
C. With respect to the opinion given in paragraph 4 above as to the
creation of a security interest in the Indenture Estate, we express no opinion
as to the creation of any security interest in any portion of the Indenture
Estate other than (I) that portion of the Indenture Estate consisting of the
Aircraft, (II) that portion of the Indenture Estate (except for the Aircraft)
which is not excluded by Section 9-104 of the Uniform Commercial Code of any
relevant jurisdiction and (III) if possession or control and dominion or both by
the Indenture Trustee is required or necessary, such portion of the Indenture
Estate as has been deposited with the Indenture Trustee pursuant to the
Indenture, or which possession or control and dominion or both, has otherwise
effectively occurred.
-4-
D. The foregoing opinions, to the extent they address the creation and
perfection of a security interest in any portion of the Indenture Estate are
further subject to the following: we have made no examination of, and we express
no opinion as to, (a) the title of any person to the Indenture Estate or any
portion thereof, (b) the value of any security granted to the Indenture Trustee
and (c) the priority of any such security interest.
E. We have assumed the due authorization, execution and delivery of the
Operative Documents by each of the parties thereto (including the Company) and
that each of such parties has the full power, authority and legal right to
execute, deliver and perform such documents.
F. Except to the extent expressly set forth in paragraphs 1, 5, 6 and 7,
we have assumed that each of the Operative Documents is enforceable against each
of the parties thereto.
G. With respect to the opinions given in paragraphs 5, 6 and 7 our opinion
is subject to limitations of Maryland law applicable to FNBM or the Indenture
Trustee, Pass Through Trustee or Subordination Agent, as the case may be, as to
which we express no opinion.
H. We have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals and the conformity to the originals
of all documents submitted to us as copies, which facts we have not verified
independently.
I. We have assumed that the Operative Documents and the transactions
contemplated thereby are not within the prohibitions of Section 406 of the
Employee Retirement Income Security Act of 1974.
J. With respect to the opinion given in paragraph 8, we express no opinion
as to the availability of the benefits of Section 1110 of the Bankruptcy Code to
any Replacement Aircraft or Replacement Engine.
K. In giving the foregoing opinion, we have relied upon the opinions
delivered to you today of Xxxxx & Xxxxxxx with respect to the matters set forth
therein. Our opinion is subject to all applicable qualifications and exceptions
(except for those set forth in clauses (i) (subject however to paragraph A
above) and (ii) thereof) set forth in such opinion.
-5-
The opinions expressed herein are solely for the benefit of and may only
be relied upon by, the named addressees in connection with the transactions
contemplated by the Participation Agreement. This opinion may not be furnished
or relied upon by any other person without the prior written consent of this
Firm. The opinions expressed herein are as of the date hereof and we make no
undertaking to amend or supplement such opinions as facts and circumstances come
to our attention or changes in the law occur which could affect such opinions.
Very truly yours,
-6-
Schedule of Addresses
The First National Bank of Maryland,
as Indenture Trustee, Pass Through
Trustee and Subordination Agent
ABN AMRO Bank N.V.
Standard & Poor's Rating Services
Exhibit A-3 to
Owned Aircraft
Participation Agreement
[FNBM Owned Aircraft Opinion]
__________, 199_
To the Persons Listed in Schedule A Attached Hereto
Re: Midway Airlines Corporation
Financing of One Canadair
Regional Jet Aircraft Series 200ER Aircraft
U.S. Registration No. N______
Gentlemen:
We have acted as special counsel to The First National Bank of Maryland, a
national banking association ("First National"), in connection with the
Participation Agreement [N_________], dated as of ________, 199_ (the
"Participation Agreement"), among Midway Airlines Corporation^ and First
National, not in its individual capacity (except as expressly set forth therein)
but solely as Indenture Trustee, as Pass-Through Trustee and as Subordination
Agent. Pursuant to the Participation Agreement, one Canadair Regional Jet Series
200ER Aircraft bearing U.S. Registration No. N______ (the "Aircraft") is being
financed. This opinion is furnished pursuant to Section 3.01(b)(xviii)(C) of the
Participation Agreement. Capitalized terms used herein and not defined have the
meanings given to such terms in the Participation Agreement, except that
references herein to any instrument shall mean such instrument as in effect on
the date hereof.
We have examined executed counterparts or copies otherwise identified to
our satisfaction of the following documents:
(a) the Participation Agreement;
(b) the Indenture; and
________, 199_
Page 2
(c) the Equipment Notes
(each of the documents identified in paragraphs (a) through (c) above are
collectively referred to as the "Indenture Trustee's Documents").
We have also examined originals or copies of such other documents, such
corporate records, certificates and other statements of governmental officials
and corporate officers and other representatives of the corporations or entities
referred to herein and such other instruments as we have deemed necessary or
appropriate for the purposes of this opinion. Moreover, as to certain facts
material to the opinions expressed herein, we have relied upon representations
and warranties contained in the Indenture Trustee's Documents.
In basing the opinions and other matters set forth herein on "our
knowledge", the words "our knowledge" signify that, in the course of our review
and analysis for the purpose of rendering this opinion, no information has come
to our attention that would give us actual knowledge or actual notice that any
such opinions or other matters are not accurate or that any of the foregoing
documents, records, certificates, statements and information on which we have
relied are not accurate and complete. Except as otherwise stated herein, we have
undertaken no independent investigation or verification of such matters. The
words "our knowledge" and similar language used herein are intended to be
limited to the knowledge of the lawyers within our firm who have worked on
matters relating to this opinion letter.
Based upon the foregoing and upon an examination of such questions of law
as we have considered necessary or appropriate, and subject to the assumptions,
exceptions and qualifications set forth below, we advise you that, in our
opinion:
1. First National is a national banking association duly incorporated and
validly existing under the laws of the United States of America holding a valid
certificate to do business as a national banking association, with banking and
trust powers, and each of First National and the Indenture Trustee, as the case
may be, has or had, on the date of execution thereof, full corporate power,
authority and legal right to execute, deliver and perform its duties pursuant to
each of the Indenture Trustee's Documents to which it is or is to be a party and
to authenticate the Equipment Notes delivered on the date hereof.
2. Each of First National and the Indenture Trustee, as the case may be,
has duly authorized, executed and delivered each Indenture Trustee Document to
which it is a party; each such document constitutes a legal, valid and binding
obligation of the Indenture Trustee (and, to the extent set forth in the
respective Indenture Trustee's Documents, of First National) enforceable against
the Indenture Trustee (and, to the extent set forth in the respective Indenture
Trustee's Documents, against First National) in accordance with its terms.
3. The Equipment Notes issued and dated the date hereof have been duly
authenticated and delivered by the Indenture Trustee pursuant to the terms of
the Indenture.
________, 199_
Page 3
4. Neither the authorization, execution and delivery by the Indenture
Trustee or First National, as the case may be, of the Indenture Trustee's
Documents, nor the authentication and delivery by the Indenture Trustee of the
Equipment Notes nor the fulfillment or compliance by the Indenture Trustee or
First National, as the case may be, with the respective terms and provisions
thereof nor the consummation of any of the transactions by the Indenture Trustee
or First National, as the case may be, contemplated thereby, requires the
consent or approval of, the giving of notice to, the registration with, or the
taking of any other action in respect of, any court or administrative or
governmental authority or agency of the State of Maryland or the United States
of America governing the banking or trust powers of First National.
5. The execution, delivery and performance by the Indenture Trustee or
First National, as the case may be, of each of the Indenture Trustee's Documents
and the authentication and delivery of the Equipment Notes by the Indenture
Trustee are not in violation of the articles of association or by-laws of First
National or of any law, governmental rule, or regulation of the State of
Maryland or the United States of America governing the banking or trust powers
of First National or, to our knowledge, of any indenture, mortgage, bank credit
agreement, note or bond purchase agreement, long-term lease, license or other
agreement or instrument to which it is a party or by which it is bound that is
material to the Indenture Trustee or First National or, to our knowledge, of any
judgment or order of the State of Maryland or the United States of America
relating to the banking or trust powers of First National.
6. There are no fees, taxes or other governmental charges payable by the
Owner Trustee, the Indenture Trustee (except taxes imposed on fees payable to
First National) or the holders of the Equipment Notes to the State of Maryland
or any political subdivision thereof under the laws of the State of Maryland or
any political subdivision thereof in existence on the date hereof, in connection
with the execution, delivery or performance of any of the Operative Agreements
solely because First National (a) has its principal place of business in the
State of Maryland, (b) performs (in its individual capacity or as Indenture
Trustee) any or all of its duties under the Indenture Trustee's Documents in the
State of Maryland, and (c) engages in any activities unrelated to the
transactions contemplated by the Indenture Trustee's Documents in the State of
Maryland. Neither the Indenture Trustee nor the trust created under the
Indenture will be subject to any fee, tax or other governmental charge (except
for taxes imposed on fees payable to First National) under the laws of the State
of Maryland or any political subdivision thereof in existence on the date
hereof, on, based on or measured by, directly or indirectly, the gross receipts,
net income or value of the Trust Indenture Estate solely because First National
(a) has its principal place of business in the State of Maryland, (b) performs
(in its individual capacity or as Indenture Trustee) any or all of its duties
under the Indenture Trustee's Documents in the State of Maryland, and (c)
engages in any activities unrelated to the transactions contemplated by the
Indenture Trustee's Documents in the State of Maryland. There is no fee, tax or
other governmental charges (except for taxes imposed on fees payable to First
National) under the laws of the State of Maryland or any political
________, 199_
Page 4
subdivision thereof in existence on the date hereof, on, based on or measured by
any payments under the Equipment Notes by reason of the creation of the trust
under the Indenture solely because First National (a) has its principal place of
business in the State of Maryland, (b) performs (in its individual capacity or
as Indenture Trustee) any or all of its duties under the Indenture Trustee's
Documents in the State of Maryland, and (c) engages in any activities unrelated
to the transactions contemplated by the Indenture Trustee's Documents in the
State of Maryland. We express no opinion as to whether or not any fees, taxes or
other charges are now or hereafter may be payable by the Owner Participant to
the State of Maryland or any political subdivision thereof in connection with
(a) the execution, delivery or performance by the Owner Participant of any of
the Indenture, the Participation Agreement or any of the other Operative
Agreements, and (b) the making by the Owner Participant of its investment in the
Aircraft.
7. To our knowledge, there are no actions, suits, investigations or
proceedings pending or threatened against or affecting First National or the
Indenture Trustee, as the case may be, or any of its properties in any court or
before any administrative agency or arbitrator, which, if adversely determined,
would materially adversely affect the ability of First National or the Indenture
Trustee, as the case may be, to perform its obligations under any of the
Indenture Trustee's Documents, and to our knowledge, there are no pending or
threatened actions or proceedings before any court, administrative agency or
tribunal involving First National or the Indenture Trustee, as the case may be,
in connection with the transactions contemplated by any of the Indenture
Trustee's Documents.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. We are admitted to practice law in the State of Maryland and we do not
hold ourselves out as being experts on the laws of any other jurisdiction. The
foregoing opinions are limited to the laws of the State of Maryland and the
Federal laws of the United States of America governing the banking and trust
powers of First National. In addition, we express no opinion with respect to (i)
Federal securities laws, including the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of
1939, as amended, (ii) the Federal Aviation Act of 1953, as amended, and (iii)
state securities or blue sky laws. Insofar as the foregoing opinions relate to
the validity and enforceability in the State of Maryland of the Equipment Notes
and the other Indenture Trustee's Documents expressed to be governed by the laws
of the State of New York, we have assumed that the laws of the State of New York
are identical to the laws of the State of Maryland in all material respects, and
that the Equipment Notes and such Indenture Trustee's Documents constitute
legal, valid, binding and enforceable documents or instruments under such laws
(as to which we express no opinion).
B. The foregoing opinions regarding enforceability of any document or
instrument, are subject to (i) applicable bankruptcy, insolvency, fraudulent
conveyance, moratorium,
________, 199_
Page 5
reorganization, receivership and similar laws affecting the rights and remedies
of creditors generally, and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
C. We have assumed the due authorization, execution and delivery by each
of the parties thereto, other than First National and the Indenture Trustee, of
the Indenture Trustee's Documents to which each is a party and that each of such
parties has the full power, authority and legal right to execute and deliver
each such document.
D. We have assumed that all signatures (other than those of the Indenture
Trustee or First National) on documents and instruments examined by us are
genuine, that all documents and instruments submitted to us as originals are
authentic, and that all documents and instruments submitted to us as copies
conform with the originals, which facts we have not independently verified.
E. We have assumed that the Participation Agreement and the transactions
contemplated thereby are not within the prohibitions of Section 406 of the
Employee Retirement Income Security Act of 1974, as amended.
F. We do not purport to be experts in respect of, or express any opinion
concerning laws, rules or regulations applicable to the particular nature of the
Aircraft and other equipment involved in this transaction.
G. We have made no investigation of, and we express no opinion concerning,
the nature of the title to any part of the Aircraft and other equipment or the
Trust Indenture Estate involved in this transaction or the priority of any
mortgage or security interest.
H. The opinions expressed herein concern only the effect of the laws
(excluding the principles of conflict of laws) of the State of Maryland and the
United States of America as currently in effect. We assume no obligation to
supplement this opinion if any applicable laws change after the date hereof or
if we become aware of any fact that might change the opinions expressed herein
after the date hereof.
I. The opinions expressed in this letter are limited to the matters set
forth in this letter, and no other opinions should be inferred beyond the
matters expressly stated.
________, 199_
Page 6
This opinion is rendered solely for your benefit and may not be relied
upon by any other person or entity for any purpose without our prior written
consent.
Sincerely yours,
OBER, KALER, XXXXXX & XXXXXXX,
A PROFESSIONAL CORPORATION
By:___________________________
Shareholder
________, 199_
Page 7
SCHEDULE A
ADDRESSEES
The First National Bank of Maryland, as Indenture Trustee and as Pass-Through
Trustee Baltimore, Maryland
Midway Airlines
Durham, North Carolina
[LETTERHEAD OF XXXXX & XXXXXXX]
Exhibit A-4 to
Owned Aircraft
Participation Agreement
[FAA Counsel Owned Aircraft Opinion]
___________, 1998
(insert addressees)
Re: ______________ model _______________ aircraft with manufacturer's
serial number __________ and United States nationality and
registration marks N_______ (the "Aircraft")
Ladies and Gentlemen:
This letter confirms that we filed with the Federal Aviation
Administration (the "FAA") today at __:__ __ .M., C.__.T., the _________ dated
as of _______________, 1998 (the "Security Agreement") between ________ as
debtor (the "Debtor") and ___________ as secured party (the "Secured Party")
covering the Aircraft and the ___________ model _________ aircraft engines with
manufacturer's serial numbers_________________________________ (the "Engines").
Based upon our examination of the Security Agreement and of such records
of the FAA as we deemed necessary to render this opinion and as were made
available to us by the FAA, it is our opinion that:
(a) the Security Agreement is in due form for recordation by and has
been duly filed for recordation with the FAA pursuant to and in
accordance with the provisions of Section 44107 of Title 49 of the
United States Code:
(b) legal title to the Aircraft is vested in the Debtor and the Aircraft
is duly registered in the name of the Debtor pursuant to and in
accordance with the provisions of Sections 44102 and 44103 of Title
49 of the United States Code:
(c) the Aircraft and the Engines are free and clear of all liens,
security interests and encumbrances of record with the FAA other
than such as are created by the Security Agreement;
Page 2
(d) the Security Agreement creates a duly and validly perfected first
priority security interest in favor of the Secured Party in the
Aircraft and the Engines; and
(e) the Security Agreement is not required to be refiled with the FAA or
filed or recorded in any other place within the United States in
order to perfect or maintain the perfection of the security interest
created thereby in the Aircraft and the Engines under the applicable
laws of any jurisdiction within the United States.
No opinion is herein expressed as to: (i) laws other than the federal laws
of the United States; (ii) the validity or enforceability under local law of the
Security Agreement; or (iii) the recognition of the perfection of the security
interest created by the Security Agreement against third parties in any legal
proceedings outside the United States. Since our examination was limited to
records maintained by the FAA Aircraft Registry, our opinion does not cover
liens which are perfected without the filing of notice thereof with the FAA,
such as federal tax liens, liens arising under Section 1368(a) of Title 29 of
the United States Code and possessory artisans' liens and was subject to the
accuracy of FAA personnel in the filing, indexing and recording of instruments
filed with the FAA and in the search for encumbrance cross-reference index cards
for the Engines.
Very truly yours,
XXXXX X. XXXXXX
For the Firm
RDJ:pkk
Exhibit B
Certain Economic Information
"Minimum Liability Amount" shall mean $_____________.
-30-
[Exhibit C-2 to Note Purchase
Agreement - Form of Owned
Aircraft Indenture]
================================================================================
TRUST INDENTURE AND SECURITY AGREEMENT [N_____]
dated as of _______, ____, 199__
between
MIDWAY AIRLINES CORPORATION
and
THE FIRST NATIONAL BANK OF MARYLAND,
as Indenture Trustee
================================================================================
COVERING ONE CANADAIR REGIONAL JET SERIES 200ER AIRCRAFT
BEARING U.S. REGISTRATION NO. N____
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS............................................... 5
Section 1.01 Definitions........................................ 5
ARTICLE II ISSUE, EXECUTION, FORM AND
REGISTRATION OF EQUIPMENT NOTES;.......................... 5
Section 2.01. Authentication and Delivery of Equipment Notes..... 5
Section 2.02. Execution of Equipment Notes....................... 5
Section 2.03. Authentication..................................... 6
Section 2.04. Form and Terms of Equipment Notes; Payments on
Equipment Notes.................................... 6
Section 2.05. [Reserved]......................................... 8
Section 2.06. Registration, Transfer and Exchange................ 8
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen
Equipment Notes.................................... 9
Section 2.08. Cancellation of Equipment Notes; Destruction
Thereof............................................ 10
Section 2.09. Termination of Interest in Trust Indenture Estate.. 10
Section 2.10. Equipment Notes in Respect of Replacement
Aircraft........................................... 11
Section 2.11. [Reserved]......................................... 11
Section 2.12. Subordination...................................... 11
ARTICLE III COVENANTS................................................. 12
Section 3.01. Payment of Principal, Make-Whole Premium and
Interest........................................... 12
Section 3.02. Offices for Payments, etc.......................... 12
Section 3.03. Appointment to Fill a Vacancy in Office of
Indenture Trustee.................................. 12
Section 3.04. Paying Agents...................................... 12
Section 3.05. [Reserved]......................................... 13
Section 3.06. [Reserved]......................................... 13
Section 3.07. Disposal of Collateral............................. 13
Section 3.08. No Representations or Warranties as to Aircraft
or Documents....................................... 13
Section 3.09. Further Assurances; Financing Statements........... 13
Section 3.10 Holder Lists: Ownership of Equipment Notes......... 13
ARTICLE IV COVENANTS OF COMPANY...................................... 14
Section 4.01. Possession, Operation and Use, Maintenance
Registration and Insignia.......................... 14
-i-
Section 4.02. Inspection......................................... 18
Section 4.03. Replacement and Pooling of Parts; Alterations,
Modifications and Additions; Substitution of
Engines............................................ 19
Section 4.04. Loss, Destruction or Requisition................... 22
Section 4.05. Insurance.......................................... 25
Section 4.06. Liens.............................................. 29
Section 4.07. Further Assurances................................. 29
ARTICLE V RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE.................... 30
Section 5.01. Regular Distribution............................... 30
Section 5.02. Event of Loss and Replacement; Prepayment.......... 31
Section 5.03. Payment After Indenture Event of Default, etc...... 32
Section 5.04. Certain Payments................................... 35
Section 5.05. Other Payments..................................... 35
Section 5.06. [Reserved]......................................... 35
Section 5.07. Application of Payments............................ 35
Section 5.08. Investment of Amounts Held by Indenture Trustee.... 35
Section 5.09. Withholding Taxes.................................. 36
ARTICLE VI PREPAYMENT OF EQUIPMENT NOTES............................. 37
Section 6.01. No Prepayment Except as Specified.................. 37
Section 6.02. Prepayment of Equipment Notes...................... 37
Section 6.03. Notice of Prepayment to Holders.................... 38
Section 6.04. Deposit of Prepayment Price........................ 38
Section 6.05. Equipment Notes Payable on Prepayment Date......... 38
ARTICLE VII INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS.......................... 39
Section 7.01. Indenture Event of Default......................... 39
Section 7.02. Remedies........................................... 40
Section 7.03. Return of Aircraft, etc............................ 42
Section 7.04. Indenture Trustee May Prove Debt................... 44
Section 7.05. Remedies Cumulative................................ 46
Section 7.06. Suits for Enforcement.............................. 46
Section 7.07. Discontinuance of Proceedings...................... 46
Section 7.08. Unconditional Right of Holders to Payments on
Equipment Notes.................................... 47
Section 7.09. Control by Holders................................. 47
Section 7.10. Waiver of Past Indenture Default................... 47
-ii-
Section 7.11. Notice of Indenture Default........................ 48
ARTICLE VIII [RESERVED]................................................ 48
ARTICLE IX CONCERNING THE INDENTURE TRUSTEE.......................... 48
Section 9.01. Acceptance of Trusts............................... 48
Section 9.02. Duties Before, and During, Existence of Indenture
Event of Default................................... 48
Section 9.03. Certain Rights of the Indenture Trustee............ 50
Section 9.04. Indenture Trustee Not Responsible for Recitals,
Equipment Notes, or Proceeds....................... 51
Section 9.05. Indenture Trustee and Agents May Hold Equipment
Notes; Collections, etc............................ 51
Section 9.06. Moneys Held by Indenture Trustee................... 51
Section 9.07. Right of Indenture Trustee to Rely on Officer's
Certificate, etc................................... 52
Section 9.08. Replacement Airframes and Replacement Engines...... 52
Section 9.09. Indenture Supplement for Replacements.............. 55
Section 9.10. Effect of Replacement.............................. 55
Section 9.11. Compensation....................................... 55
ARTICLE X CONCERNING THE HOLDERS.................................... 56
Section 10.01. Evidence of Action Taken by Holders................ 56
Section 10.02. Proof of Execution of Instruments and of Holding
of Equipment Notes................................. 56
Section 10.03. Holders to Be Treated as Owners.................... 56
Section 10.04. Equipment Notes Owned by Company Deemed Not
Outstanding........................................ 57
Section 10.05. ERISA.............................................. 57
ARTICLE XI [RESERVED]................................................ 58
ARTICLE XII SUCCESSOR TRUSTEES........................................ 58
Section 12.01. [Reserved]......................................... 58
Section 12.02. Resignation and Removal of Indenture Trustee:
Appointment of Successor........................... 58
Section 12.03. Persons Eligible for Appointment as Indenture
Trustee............................................ 59
Section 12.04. Acceptance of Appointment by Successor Trustee..... 59
Section 12.05. Merger, Consolidation or Succession to Business
of Indenture Trustee............................... 60
Section 12.06. Appointment of Separate Trustees................... 60
-iii-
ARTICLE XIII SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS....................... 62
Section 13.01. Supplemental Indentures Without Consent of
Holders............................................ 62
Section 13.02. Supplemental Indentures With Consent of Holders.... 64
Section 13.03. Effect of Supplemental Indenture................... 65
Section 13.04. Documents to Be Given to Indenture Trustee......... 65
Section 13.05. Notation on Equipment Notes in Respect of
Supplemental Indentures............................ 65
Section 13.06. No Request Necessary for Indenture Supplement...... 65
Section 13.07. Notices to Liquidity Providers..................... 66
ARTICLE XIV SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS.......................................... 66
Section 14.01. Satisfaction and Discharge of Indenture:
Termination of Indenture........................... 66
Section 14.02. Application by Indenture Trustee of Funds
Deposited for Payment of Equipment Notes........... 67
Section 14.03. Repayment of Moneys Held by Paying Agent........... 67
Section 14.04. Transfer of Unclaimed Money Held by Indenture
Trustee and Paying Agent........................... 67
ARTICLE XV MISCELLANEOUS............................................. 67
Section 15.01. Capacity in Which Acting........................... 67
Section 15.02. No Legal Title to Trust Indenture Estate in
Holders ........................................... 67
Section 15.03. Sale of Collateral by Indenture Trustee is
Binding............................................ 68
Section 15.04. Indenture Trustee, FNBM, Company, Liquidity
Providers and Holders Only......................... 68
Section 15.05. No Action Contrary to Company's Rights............. 68
Section 15.06. Notices............................................ 68
Section 15.07. Officer's Certificates and Opinions of Counsel..... 68
Section 15.08. Severability....................................... 69
Section 15.09. No Oral Modifications or Continuing Waivers........ 69
Section 15.10. Successors and Assigns............................. 69
Section 15.11. Headings........................................... 70
Section 15.12. Normal Commercial Relations........................ 70
Section 15.13. Governing Law; Counterparts........................ 70
Annex A - Principal Amount of Equipment Notes
Annex B - Amortization Schedule
Appendix A - Definitions
Exhibit A - Form of Indenture Supplement
-iv-
Exhibit B - Form of Equipment Note
Exhibit C - List of Countries
-v-
TRUST INDENTURE AND SECURITY AGREEMENT [N_______]
TRUST INDENTURE AND SECURITY AGREEMENT [N ] dated as of ___________,
__, 199__ (the "Indenture"), between MIDWAY AIRLINES CORPORATION, a Delaware
corporation and THE FIRST NATIONAL BANK OF MARYLAND, a national banking
association (when acting in its individual capacity, "FNBM"), as Indenture
Trustee hereunder (the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Company, the Indenture Trustee, the Pass Through
Trustees and the Subordination Agent have entered into the Participation
Agreement, pursuant to which the Pass Through Trustees have agreed to purchase
the Equipment Notes from the Company by advancing to the Company an aggregate
amount equal to the principal amount of such Equipment Notes, and the Company
has agreed to issue and deliver pursuant to this Indenture such Equipment Notes
to the Pass Through Trustees, and the Company shall use the proceeds from the
purchase of such Equipment Notes in connection with the financing of the
acquisition of the Aircraft; and
WHEREAS, the Company desires by this Indenture, among other things
(i) to issue the Equipment Notes as provided in the Participation Agreement, and
(ii) to grant to the Indenture Trustee a Lien on the Collateral in accordance
with the terms hereof, in trust, as security for the Company's obligations to
the Holders, for the equal and ratable benefit and security of such Holders;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Company, and authenticated, issued and delivered hereunder, the
valid obligations of the Company; and
WHEREAS, all things necessary to make this Indenture the valid,
binding and legal obligation of the Company, enforceable in accordance with its
terms, have been done and performed and have happened.
NOW, THEREFORE, the parties agree as follows:
GRANTING CLAUSE
NOW, THEREFORE, in consideration of the mutual promises contained
herein and to secure (i) the prompt payment of the principal of and Make-Whole
Premium, if any, and interest on, and all other amounts due with respect to, all
the Equipment Notes from time to time outstanding under this Indenture and all
other amounts due hereunder and (ii) the performance and observance by the
Company of all the agreements, covenants and provisions in this Indenture, the
Equipment Notes and the Participation Agreement contained for the benefit of the
Holders, and the prompt payment of any and all amounts from time to time owing
under the Participation Agreement by the Company to the Holders and each of the
Indenture Indemnitees (provided, that, with respect to amounts owed to the
Liquidity Providers which relate to amounts due under the Liquidity Facilities,
the amounts secured hereby shall only include such amounts to the extent due and
owing pursuant to the final paragraph of Section 2.4 hereof) (collectively the
"Secured Obligations") and for the uses and purposes and subject to the terms
and provisions of this Indenture, and in consideration of the premises and of
the covenants in this Indenture and in the Equipment Notes and of the purchase
of the Equipment Notes by their Holders, and of the sum of $1 paid to the
Company by the Indenture Trustee at or before the delivery of this Indenture,
the receipt and sufficiency of which are hereby acknowledged, the Company has
granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged,
granted a first priority security interest in and confirmed, and does hereby
grant, bargain, sell, assign, transfer, convey, mortgage, pledge and grant a
first priority security interest in and confirm to the Indenture Trustee, its
successors and assigns, in trust for the equal and ratable security and benefit
of the Holders and each of the Indenture Indemnitees, a first priority security
interest in and first mortgage Lien on all estate, right, title and interest of
the Company in, to and under the following described property, rights and
privileges (which collectively, but including all property specifically
subjected to the Lien of this Indenture by the terms hereof, by any supplement
to this Indenture (including the Indenture Supplement) or any mortgage
supplemental to this Indenture, are herein referred to as the "Collateral"),
subject always to the terms and conditions of this Indenture:
(1) The Airframe, as described in the Indenture Supplement, and any
airframe substituted in replacement thereof pursuant to the provisions of this
Indenture; the Engines, as the same are more particularly described in the
Indenture Supplement, whether or not such Engines shall be installed in or
attached to the Airframe or any other airframe, and any Replacement Engine
therefor; and all Parts in respect of the Airframe and the Engines and all
records, logs and other documents at any time maintained with respect to the
foregoing property;
(2) All the tolls, rents, issues, profits, products, revenues and
other income (including sales proceeds) of the property subjected or required to
be subjected to the Lien of this Indenture (it being understood that revenues
earned for the carriage of persons, property as mail are not such proceeds) and
all of the estate, right, title and interest of the Company in and to the same
and every part of said property;
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(3) All other moneys and securities (including Permitted
Investments) now or hereafter paid or deposited or required to be paid or
deposited to or with the Indenture Trustee by or for the account of the Company
pursuant to any term of any Operative Agreement, and held or required to be held
by the Indenture Trustee hereunder;
(4) All requisition and insurance proceeds with respect to the
Aircraft or any part thereof, including insurance required to be maintained by
the Company under Section 4.05 hereof;
(5) All right, interest, claims and demands of the Company in, to
and under the Purchase Agreement to the extent the same relate to continuing
rights of the Company in respect of any warranty, express or implied, as to
title, materials, workmanship, design or patent infringement with respect to the
Aircraft and to any service life policy, aircraft or engine performance
guarantee and indemnity provisions with respect to the Aircraft together with
all rights, powers, privileges, options and other benefits of the Company
thereunder with respect to the Aircraft, including, without limitation, the
right to make all waivers and agreements, to give and receive all notices and
other instruments or communications, to take such action upon the occurrence of
a default thereunder, including the commencement, conduct and consummation of
legal, administrative or other proceedings, as shall be permitted thereby or by
law, and to do any and all other things which the Company is or may be entitled
to do thereunder reserving to the Company, however, (i) all of the Company's
rights and interests in and to the Purchase Agreement as and to the extent that
the same relate to aircraft other than the Aircraft and (ii) with respect to the
Aircraft, so long as Manufacturer shall not have received notice from the
Indenture Trustee that an Indenture Event of Default has occurred and is
continuing and the Indenture Trustee has declared the Indenture to be in default
and until Manufacturer has received notice from the Indenture Trustee that such
Indenture Event of Default has been cured or waived, the right to demand, accept
and retain all rights in and to all property, data and services which
Manufacturer is obligated to provide or does provide pursuant to the Purchase
Agreement; and
(6) All proceeds of the foregoing.
PROVIDED, HOWEVER, that notwithstanding any of the foregoing provisions, so long
as no Indenture Event of Default shall have occurred and be continuing the
Company shall have the right, to the exclusion of the Indenture Trustee, (a) to
quiet enjoyment of the Airframe and Engines, and to possess, use, retain and
control the Airframe and Engines and all revenues, income and profits derived
therefrom, and (b) with respect to the Purchase Agreement, to exercise in the
Company's name all rights and powers of the buyer under the Purchase Agreement
and to retain any recovery or benefit resulting from the enforcement of any
warranty or indemnity under the Purchase Agreement; and provided further that,
notwithstanding the occurrence and continuation of an Indenture Event of
Default, the Indenture Trustee shall not enter into any
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amendment of the Purchase Agreement which would increase the obligations of the
Company thereunder.
HABENDUM CLAUSE
TO HAVE AND TO HOLD the aforesaid property unto the Indenture Trustee, its
successors and assigns, in trust for the equal and ratable benefit and security
of the Holders from time to time of the Equipment Notes and the Indenture
Indemnitees, except as provided in Section 2.12 and Article V hereof, without
any priority of any one Equipment Note over any other and for the uses and
purposes and subject to the terms and conditions set forth in this Indenture.
It is expressly agreed that anything contained in this Indenture to the
contrary notwithstanding, the Company shall remain liable under the Operative
Agreements and the Purchase Agreement to perform all of the obligations assumed
by it under any of those documents, all in accordance with and pursuant to the
terms and provisions of those documents, and the Indenture Trustee, the Holders
and the Indenture Indemnitees shall have no obligation or liability under such
documents by reason of or arising out of the assignment under this Indenture,
nor shall the Indenture Trustee, the Holders or the Indenture Indemnitees be
required or obligated in any manner to perform or fulfill any obligations of the
Company under or pursuant to the Operative Agreements or the Purchase Agreement
or, except as expressly provided in this Indenture, to make any payment, or to
make any inquiry as to the nature or sufficiency of any payment received by it,
or present or file any claim, or take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times. The Company agrees that it will not enter into
any agreement that would amend, modify, supplement, rescind, cancel or terminate
the Purchase Agreement in respect of the Aircraft without the prior written
consent of the Indenture Trustee, to the extent any such amendment,
modification, supplement, recision, cancellation or termination would have a
material adverse effect on the Indenture Trustee or the Holders.
The Company does hereby irrevocably constitute and appoint the Indenture
Trustee the true and lawful attorney of the Company (which appointment is
coupled with an interest) with full power (in the name of the Company or
otherwise) to ask, require, demand and receive any and all moneys and claims for
money (in each case including insurance and requisition proceeds) due and to
become due under or arising out of the Indenture property which now or hereafter
constitutes part of the Collateral, to endorse any checks or other instruments
or orders in connection therewith and to file any claims or to take any action
or to institute any proceeding which the Indenture Trustee may deem to be
necessary or advisable in the premises; provided that, the Indenture Trustee
shall not exercise any such rights except upon the occurrence and during the
continuance of an Indenture Event of Default.
The Company agrees that at any time and from time to time, upon the
written request of the Indenture Trustee, the Company will, at its own expense
promptly and
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duly execute and deliver or cause to be duly executed and delivered any and all
such further instruments and documents as the Indenture Trustee may reasonably
deem desirable in obtaining the full benefits of the assignment hereunder and of
the rights and powers herein granted.
It is hereby further covenanted and agreed by and between the parties as
follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Unless the context otherwise requires,
capitalized terms utilized herein shall have the meanings set forth or
incorporated by reference, and shall be construed in the manner described, in
Appendix A to this Indenture.
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF EQUIPMENT NOTES;
Section 2.01. Authentication and Delivery of Equipment Notes. Upon the
execution and delivery of this Indenture, and from time to time thereafter,
Equipment Notes in the aggregate principal amount set forth on Annex A hereto
shall be executed by the Company and delivered to the Indenture Trustee for
authentication, and the Indenture Trustee shall thereupon authenticate and
deliver said Equipment Notes to or upon the oral or written order of the
Company, signed, if written, by an authorized officer of the Company, without
any further action by the Company.
Section 2.02. Execution of Equipment Notes. The Equipment Notes shall be
signed on behalf of the Company by an authorized officer of the Company. Such
signatures may be the manual or facsimile signatures of such officer and minor
errors or defects in any reproduction of any such signature shall not affect the
validity or enforceability of any Equipment Note which has been duly
authenticated and delivered by the Indenture Trustee.
In case any officer of the Company who shall have signed any of the
Equipment Notes shall cease to be such officer before the Equipment Notes so
signed shall be authenticated and delivered by the Indenture Trustee or disposed
of by the Company, such Equipment Note nevertheless may be authenticated and
delivered or disposed of as though the person who signed such Equipment Note had
not ceased to be such officer of the Company; and any Equipment Note may be
signed on behalf of the Company by such person or persons as, at the actual date
of the execution of such Equipment Note, shall be the proper officers of the
Company, although at the date of
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the execution and delivery of this Indenture any such person was not such an
officer. Equipment Notes bearing the facsimile signatures of individuals who
were authorized officers of the Company at the time such Equipment Notes were
issued shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Equipment Notes or did not hold such offices at the respective dates of
such Equipment Notes.
Section 2.03. Authentication. Only such Equipment Notes as shall bear
thereon a certificate of authentication substantially in the form set forth in
Exhibit B, executed by the Indenture Trustee by manual signature of one of its
authorized officers, shall be entitled to the security and benefits of this
Indenture or be valid or obligatory for any purpose. Such certificate by the
Indenture Trustee upon any Equipment Note executed by the Company shall be
conclusive evidence that the Equipment Note so authenticated has been duly
authenticated and delivered hereunder and that the Holder, as evidenced on the
Register, is entitled to the security and benefits of this Indenture.
Section 2.04. Form and Terms of Equipment Notes; Payments on Equipment
Notes. The Equipment Notes and the Indenture Trustee's certificate of
authentication shall be substantially in the form set forth in Exhibit B hereto.
The Equipment Notes shall be issuable as registered securities without coupons
and shall be numbered, lettered, or otherwise distinguished in such manner or in
accordance with such plans as the Company may determine with the approval of the
Indenture Trustee.
The Equipment Notes shall be issued in registered form only and in
denominations of $1,000 and any integral multiple thereof, shall be dated the
Delivery Date, shall be issued in four separate series consisting of Series A,
Series B, Series C, and Series D and shall be issued in the principal amounts,
and shall bear interest at the rates per annum, specified on Annex A. Interest
shall be calculated on the basis of a 360-day year of twelve 30-day months.
Any of the Equipment Notes may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
or regulations pursuant thereto, or with the rules of any securities market in
which the Equipment Notes are admitted to trading, or to conform to general
usage.
Each Equipment Note shall bear interest from the date of original issuance
thereof or from the most recent date to which interest has been paid, and shall
be payable in arrears on _______________, 199__, and on each January 2 and July
2 thereafter until maturity; provided that, under certain circumstances provided
in the Registration Rights Agreement, including in the event a Registration
Event does not occur on or prior to the date (the "Increase Date") required
pursuant to the Registration Rights Agreement, such interest rate shall be
increased by 0.5% from and including the Increase Date to but excluding the date
such Registration Event does occur. The
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principal amount of each Equipment Note shall be payable on the dates and in the
installments as set forth in Annex B hereto.
Notwithstanding the preceding paragraph, each Equipment Note shall bear
interest at the Past Due Rate on any principal, interest and any other amount
payable hereunder or under such Equipment Note, which shall not be paid in full
when due (whether at stated maturity, by acceleration, by mandatory prepayment
or otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full, payable from time to time on demand
of the Indenture Trustee.
The principal of, and Make-Whole Premium, if any, and interest on, the
Equipment Notes shall be payable at the Corporate Trust Department of the
Indenture Trustee or at any office or agency maintained for such purpose
pursuant to Section 3.02 hereof in immediately available funds prior to 12:00
noon (New York time) on the due date thereof and the Indenture Trustee shall
remit all such amounts received by it to the Holders at such account or accounts
at such financial institution or institutions as the Holders shall have
designated to the Indenture Trustee in writing, in immediately available funds,
such payment to be made if the payment was received prior to 12:00 noon New York
time by the Indenture Trustee on any Business Day, by 1:00 p.m. New York time on
such Business Day; otherwise, the Indenture Trustee shall make payment promptly,
but not later than 11:00 A.M. New York time on the next succeeding Business Day.
If any amount payable under the Equipment Notes, or under this Indenture, falls
due on a day that is not a Business Day, then such sum shall be payable on the
next succeeding Business Day, without (provided that payment is made on such
next succeeding Business Day) additional interest thereon for the period of such
extension.
The Holder at the close of business on any Record Date with respect to any
Payment Date shall be entitled to receive the interest if any payable on such
Payment Date notwithstanding any transfer or exchange of such Equipment Note
subsequent to the Record Date and prior to such Payment Date, except if and to
the extent the Company shall default in the payment of the interest due on such
Payment Date, in which case such defaulted interest shall be paid to the Holder
at the close of business on a subsequent Record Date (which shall be not less
than five or more than 15 Business Days prior to the date of payment of such
defaulted interest) established by notice given by mail by or on behalf of the
Company to the Holders not less than 15 days preceding such subsequent Record
Date.
The Company agrees to pay to the Indenture Trustee for distribution in
accordance with Section 5.04 hereof (a) any and all indemnity amounts payable by
the Company to (i) the Indenture Trustee in its individual capacity, (ii) the
Subordination Agent or (iii) each Liquidity Provider, in each case pursuant to
Article 6 of the Participation Agreement and (b) the Pro Rata Share of all
amounts owed to each Liquidity Provider by the Subordination Agent under each
Liquidity Facility other than amounts due as (i) repayments of the principal of
advances thereunder, (ii) interest on Downgrade Drawings and Non-Extension
Drawings, except to the extent exceeding
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investment earnings thereon and (iii) interest on Interest Drawings and Final
Drawings except to the extent included in Net Interest and Related Charges. As
used in this Section, "Pro Rata Share" means as of any time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued under
this Indenture other than the Series D Equipment Notes and the denominator
of which is the aggregate principal balance of all Equipment Notes issued
under this Indenture and the Related Indentures other than the Series D
Equipment Notes, and
(B) with respect to all Net Interest and Related Charges (x)
if there exists a Payment Default under any Equipment Note issued under
this Indenture a fraction, the numerator of which is the aggregate
principal balance then outstanding of Equipment Notes issued under this
Indenture other than the Series D Equipment Notes and the denominator of
which is the aggregate principal balance then outstanding of all Equipment
Notes issued under this Indenture and the Related Indentures other than
the Series D Equipment Notes under which there exists a Payment Default or
(y) at all other times, zero.
As used in this Section, "Net Interest and Related Charges" means the sum of (i)
the amount, if any, by which interest payable to each Liquidity Provider on any
Interest Drawing and Final Drawing exceeds the amount which would be payable if
such drawings bore interest at the weighted average Past Due Rate applicable to
amounts in default on all Equipment Notes plus (ii) any amounts payable under
Section 3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each
Liquidity Facility (or similar provisions of any replacement Liquidity Facility)
which result from any Interest Drawing or Final Drawing. As used in this
Section, a "Payment Default" when used in connection with an Equipment Note
issued hereunder or a Equipment Note issued under any Related Indenture means a
default in the payment of principal thereof or interest thereon (which default
has not been cured), other than solely because of acceleration.
Section 2.05. [Reserved]
Section 2.06. Registration, Transfer and Exchange. The Indenture Trustee
will keep, on behalf of the Company, at each office or agency to be maintained
for the purpose as provided in Section 3.02 hereof a Register or Registers on
which, subject to such reasonable regulations as it may prescribe, it will
register, and will register the transfer of, Equipment Notes as provided in this
Article. Such Register shall be in written form in the English language or in
any other form capable of being converted into such form within a reasonable
period of time. Upon due presentation for registration of transfer of any
Equipment Note at any such office or agency, the Company shall execute and the
Indenture Trustee shall authenticate and deliver in the name of the transferee
or transferees, in authorized denominations, a new Equipment Note or Equipment
Notes of the same Series, and with the same principal amount,
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interest rate and amortization schedule, for an equal aggregate principal
amount; provided, that such Equipment Note being transferred shall be canceled
in accordance with Section 2.08 hereof simultaneously with the issuance of the
new Equipment Note. Any Equipment Note or Equipment Notes may be exchanged for
an Equipment Note or Equipment Notes of the same Series but in other authorized
denominations, in an equal aggregate principal amount. Equipment Notes to be
exchanged shall be surrendered at any office or agency to be maintained by the
Indenture Trustee for the purpose as provided in Section 3.02 hereof, and the
Company shall execute and the Indenture Trustee shall authenticate and deliver
in exchange therefor the Equipment Note or Equipment Notes which the Holder
making the exchange shall be entitled to receive, bearing numbers not
contemporaneously or previously outstanding.
All Equipment Notes presented for registration of transfer, exchange,
prepayment or payment shall (if so required by the Company or the Indenture
Trustee) be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company and the Indenture
Trustee duly executed by the Holder or its attorney duly authorized in writing
and the Indenture Trustee may require evidence satisfactory to it as to the
compliance of any such transfer with the Securities Act. The Indenture Trustee
may require payment from the Holder of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any exchange or
registration of transfer of Equipment Notes. No service charge shall be levied
for any such transaction. The Indenture Trustee shall not be required to
exchange or register a transfer of any Equipment Notes (a) for a period of 15
days immediately preceding the first mailing of notice of prepayment of such
Equipment Notes or (b) with respect to which notice of prepayment has been given
pursuant to Section 6.03 hereof and such notice has not been revoked. All
Equipment Notes issued upon any transfer or exchange of Equipment Notes shall be
valid obligations of the Company, evidencing the same debt, and entitled to the
same security and benefits under this Indenture, as the Equipment Notes
surrendered upon such transfer or exchange.
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen Equipment
Notes. In case any Equipment Note shall become mutilated, defaced or be
apparently destroyed, lost or stolen, the Company in its discretion may execute,
and upon the written request of any Holder shall execute, and the Indenture
Trustee shall authenticate and deliver in replacement thereof, a new Equipment
Note, payable to the same Holder, bearing the same principal amount and interest
rate as the Equipment Note being replaced and bearing a number not
contemporaneously or previously outstanding, in exchange and substitution for
the mutilated or defaced Equipment Note, or in lieu of and substitution for the
Equipment Note so apparently destroyed, lost or stolen. In the case of any
Equipment Note so apparently destroyed, lost or stolen, the applicant for a
substitute Equipment Note shall furnish to the Company and the Indenture Trustee
such security or indemnity as may be required by them to indemnify and defend
and to hold each of them harmless and evidence to their satisfaction of the
apparent destruction, loss or theft of such Equipment Note and of the ownership
thereof.
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Upon the issuance of any substitute Equipment Note, the Company or the
Indenture Trustee may require payment from the Holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses incurred in connection therewith. In
case any Equipment Note which has matured or is about to mature, or has been
called for prepayment in full, shall become mutilated or defaced or be
apparently destroyed, lost or stolen, the Company may, instead of issuing a
substitute Equipment Note, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated or defaced Equipment Note),
if the applicant of any Equipment Note so apparently destroyed, lost or stolen,
for such payment shall furnish to the Company and to the Indenture Trustee such
security or indemnity as any of them may require to hold each of them harmless
and the applicant shall also furnish to the Company and the Indenture Trustee
evidence to their satisfaction of the apparent destruction, loss or theft of
such Equipment Note and of the ownership thereof.
Every substitute Equipment Note issued pursuant to the provisions of this
Section by virtue of the fact that any Equipment Note is apparently destroyed,
lost or stolen shall constitute an original additional contractual obligation of
the Company, whether or not the apparently destroyed, lost or stolen Equipment
Note shall be enforceable at any time by anyone and shall be entitled to all the
security and benefits of (but shall be subject to all the limitations of rights
set forth in) this Indenture equally and proportionately with any and all other
Equipment Notes duly authenticated and delivered hereunder. All Equipment Notes
shall be held and owned upon the express condition that, to the extent permitted
by law, the foregoing provisions are exclusive with respect to the replacement
or payment of mutilated, defaced, or apparently destroyed, lost or stolen
Equipment Notes and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the replacement or payment of negotiable instruments or other
securities without their surrender.
Section 2.08. Cancellation of Equipment Notes; Destruction Thereof. All
Equipment Notes surrendered for payment, prepayment, registration of transfer or
exchange, if surrendered to the Company or any agent of the Company or the
Indenture Trustee, shall be delivered to the Indenture Trustee for cancellation
or, if surrendered to the Indenture Trustee, shall be canceled by it; and no
Equipment Notes shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Indenture. The Indenture Trustee shall destroy
cancelled Equipment Notes held by it and deliver a certificate of destruction to
the Company. If the Company shall acquire any of the Equipment Notes, such
acquisition shall not operate as a prepayment or satisfaction of the
indebtedness represented by such Equipment Notes unless and until the same are
delivered to the Indenture Trustee for cancellation.
Section 2.09. Termination of Interest in Trust Indenture Estate. A Holder
shall not, as such, have any further interest in, or other right with respect
to, the Trust Indenture Estate when and if the principal amount of and
Make-Whole Premium, if any, and interest on and other amounts due under all
Equipment Notes held by such
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Holder and all other sums payable to such Holder hereunder and under the other
Operative Agreements shall have been paid in full.
Section 2.10. Equipment Notes in Respect of Replacement Aircraft. Upon the
execution and delivery of a supplement to this Indenture covering a Replacement
Airframe and/or Replacement Engine, as provided in Section 9.09 hereof, each
Equipment Note shall be deemed to have been issued in connection with such
Replacement Airframe and/or Replacement Engine and (in the case of a Replacement
Airframe) each Equipment Note issued thereafter upon a transfer or exchange of,
or as a replacement for, an Equipment Note, shall be designated as having been
issued in connection with such Replacement Airframe, but without any other
change therein except as provided for in this Article II.
Section 2.11. [Reserved]
Section 2.12. Subordination. (a) The Company and, by acceptance of its
Equipment Notes of any Series, each Holder of such Series, hereby agree that no
payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Certificate Holder of such Series, including any
payment or distribution of cash, property or securities after the commencement
of a proceeding of the type referred to in clause (v), (vi) or (vii) of Section
7.01 hereof, except as expressly provided in Article V hereof.
(b) By the acceptance of its Equipment Notes of any Series (other than
Series A), each Holder of such Series agrees that in the event that such Holder,
in its capacity as a Holder, shall receive any payment or distribution on any
Secured Obligations in respect of such Series which it is not entitled to
receive under this Section 2.12 or Article V hereof, it will hold any amount so
received in trust for the Senior Holder (as defined in Section 2.12(c) hereof)
and will forthwith turn over such payment to the Indenture Trustee in the form
received to be applied as provided in Article V hereof.
(c) As used in this Section 2.12, the term "Senior Holder" shall mean, (i)
the Holders of Series A Equipment Notes until the Secured Obligations in respect
of Series A Equipment Notes have been paid in full, (ii) after the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, the
Holders of Series B Equipment Notes until the Secured Obligations in respect of
Series B Equipment Notes have been paid in full, (iii) after the Secured
Obligations in respect of Series B Equipment Notes have been paid in full, the
Holders of Series C Equipment Notes until the Secured Obligations in respect of
Series C Equipment Notes have been paid in full, and (iv) after the Secured
Obligations in respect of Series C Equipment Notes have been paid in full, the
Holders of Series D Equipment Notes until the Secured Obligations in respect of
Series D Equipment Notes have been paid in full.
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ARTICLE III
COVENANTS
Section 3.01. Payment of Principal, Make-Whole Premium and Interest. The
Company covenants and agrees that it will duly and punctually pay or cause to be
paid the principal of, and interest and Make-Whole Premium, if any, and all
other amounts due on, each of the Equipment Notes and under this Indenture at
the place or places, at the respective times and in the manner provided in this
Indenture and in the Equipment Notes.
Section 3.02. Offices for Payments, etc. So long as any of the Equipment
Notes remain outstanding, the Indenture Trustee will maintain the following: (a)
an office or agency where the Equipment Notes may be presented for payment and
(b) a facility or agency where the Equipment Notes may be presented for
registration of transfer and for exchange and for prepayment as provided in this
Indenture (the "Registrar"). The Registrar shall keep a register (the
"Register") with respect to the Equipment Notes and their transfer and exchange.
The Indenture Trustee may appoint one or more co-registrars ("Co-Registrars")
for the Equipment Notes and may terminate any such appointment at any time upon
written notice. The term "Registrar" includes any Co-Registrar. The Indenture
Trustee shall initially act as Registrar.
Section 3.03. Appointment to Fill a Vacancy in Office of Indenture
Trustee. The Company, whenever necessary to avoid or fill a vacancy in the
office of Indenture Trustee, will appoint, in the manner provided in Section
12.02 hereof, an Indenture Trustee, so that there shall at all times be an
Indenture Trustee hereunder.
Section 3.04. Paying Agents. Whenever the Indenture Trustee in its sole
discretion shall appoint a paying agent (the "Paying Agent"), it will cause the
Paying Agent to execute and deliver an instrument in which the Paying Agent
shall agree with the Indenture Trustee, subject to the provisions of this
Section:
(a) that it will hold all sums received by it as such agent
for the payment of the principal of, and interest and Make-Whole Premium,
if any, on the Equipment Notes (whether such sums have been paid to it by
the Indenture Trustee or the Company) in trust for the benefit of the
Holders or of the Indenture Trustee, and
(b) that it will give the Indenture Trustee notice of any
failure by the Company to make any payment of the principal of or interest
or Make-Whole Premium, if any, on the Equipment Notes when the same shall
be due and payable.
Anything in this Section to the contrary notwithstanding, the agreements
to hold sums in trust as provided in this Section are subject to the provisions
of Sections 14.03 and 14.04 hereof.
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Section 3.05. [Reserved]
Section 3.06. [Reserved]
Section 3.07. Disposal of Collateral. At any time and from time to time
any part of the Collateral may be sold or disposed of in accordance with the
provisions of this Indenture. The Indenture Trustee shall, from time to time,
release any part of the Collateral so sold or disposed of or as to which an
Event of Loss has occurred from the Lien of this Indenture. In addition, to the
extent that such property constitutes an Airframe or Engine, the further
requirements of Section 9.08 hereof shall be satisfied.
Section 3.08. No Representations or Warranties as to Aircraft or
Documents. THE INDENTURE TRUSTEE DOES NOT MAKE NOR SHALL BE DEEMED TO HAVE MADE
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, WORKMANSHIP, VALUE, CONDITION, DESIGN, COMPLIANCE WITH
SPECIFICATIONS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR USE OR PURPOSE OF
THE AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT,
TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT
LIABILITY IN TORT OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE
AIRCRAFT OR ANY ENGINE WHATSOEVER.
Section 3.09. Further Assurances; Financing Statements. At any time and
from time to time, upon the request of the Indenture Trustee, the Company, at
its own expense, shall promptly and duly execute and deliver any and all such
further instruments and documents as may be specified in such request and as are
necessary or advisable to perfect, preserve or protect the Liens and assignments
created or intended to be created hereby, or to obtain for the Indenture Trustee
the full benefit of the specific rights and powers granted herein, including,
without limitation, the execution and delivery of Uniform Commercial Code
financing statements and continuation statements with respect thereto, or
similar instruments relating to the perfection of the Liens or assignments
created or intended to be created hereby.
Section 3.10 Holder Lists: Ownership of Equipment Notes. (a) The Indenture
Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of the Holders. If
the Indenture Trustee is not the Registrar, the Registrar shall furnish to the
Indenture Trustee semi-annually not more than ten days after each Record Date,
as of such Record Date, or at such other times as the Indenture Trustee may
request in writing, a list, in such form and as of such date as the Indenture
Trustee may reasonably require, containing all the information in the possession
or control of the Registrar as to the names and addresses of the Holders and the
amounts and Maturities of the Equipment Notes held by such Holders.
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(b) Ownership of the Equipment Notes shall be proved by the Register kept
by the Registrar.
ARTICLE IV
COVENANTS OF COMPANY
Section 4.01. Possession, Operation and Use,
Maintenance Registration and Insignia.
(a) General.
Except as otherwise expressly provided herein, the Company shall be
entitled to operate, use, locate, employ or otherwise utilize or not utilize the
Airframe, Engines and Parts in any lawful manner or place in accordance with the
Company's business judgment.
(b) Possession.
The Company shall not lease, or otherwise in any manner deliver,
relinquish or transfer possession of the Airframe or any Engine to any Person or
install any Engine, or permit any Engine to be installed, on any airframe other
than the Airframe, so long as such Airframe is subject to the Lien of this
Indenture, without the prior consent of the Indenture Trustee, which consent
shall not be unreasonably withheld, except that the Company may without the
prior consent of the Indenture Trustee:
(i) enter into a charter or wet lease or other similar
arrangement under which the Company has operational control of
the Airframe and any Engines installed thereon in the course
of the Company's business (which shall not be considered a
transfer of possession hereunder), provided that the Company's
obligations under this Indenture shall continue in full force
and effect notwithstanding any such charter or wet lease or
other similar arrangement;
(ii) deliver possession of the Airframe or any Engine or
any Part to the manufacturer thereof or to any organization
for testing, service, repair, maintenance, overhaul work or
other similar purposes or for alterations or modifications or
additions required or permitted by the terms of this
Indenture;
(iii) subject the Airframe and any Engines installed
thereon to interchange agreements or any Engine to interchange
or pooling agreements or arrangements which are applicable to
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other similar property owned by or leased to the Company and
are entered into by the Company in the course of its airline
business with any air carrier, provided, that (A) no such
agreement or arrangement shall under any circumstances result
in, contemplate or require the transfer of title to the
Aircraft or Airframe and (B) if the Company's title to any
Engine shall be divested under any such agreement or
arrangement, such divestiture shall be deemed to be an Event
of Loss with respect to such Engine and the Company shall
comply with Section 4.03(e) hereof in respect thereof;
(iv) install an Engine on an airframe owned by the
Company free and clear of all Liens except (A) Permitted
Liens, (B) those which apply only to the engines (other than
the Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than
Parts) installed on such airframe, and (C) those created by
the rights of other air carriers under interchange or pooling
agreements or other arrangements customary in the airline
industry which do not contemplate, permit or require the
transfer of title to such airframe or engines installed
thereon;
(v) install an Engine on an airframe, leased to the
Company or purchased by the Company subject to a conditional
sale or other security agreement, provided that such Engine
shall not thereby become subject to the lien of such lease,
conditional sale or other security agreement;
(vi) install an Engine on an airframe, owned by the
Company, leased by the Company or purchased by the Company
subject to a conditional sale or other security agreement
under circumstances where neither clause (iv) nor clause (v)
above is applicable, provided that any divestiture or
non-curable impairment of title to such Engine resulting from
such installation shall be deemed an Event of Loss with
respect to such Engine and the Company shall comply with
Section 4.03 (e) hereof;
(vii) transfer possession of the Airframe or Engine to
the United States of America or any instrumentality thereof
pursuant to the Civil Reserve Air Fleet Program (as
established and administered pursuant to Executive Order
11490, as amended, as superseded by United States Executive
Order No. 12656) or any similar or substitute program;
(viii) transfer possession of the Airframe or any Engine
to the United States of America, or to a foreign government,
when
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required by Applicable Law (it being understood that nothing
in this clause (viii) shall relieve the Company from its
obligations under Section 4.04(a) if such transfer becomes an
Event of Loss); and
(ix) transfer possession of the Airframe or any Engine
to the United States of America or any instrumentality or
agency thereof pursuant to a sublease, contract or other
instrument;
(x) so long as no Specified Default shall have occurred
and be continuing, and subject to the provisions of this
Section 4.01(b), enter into a lease with respect to any Engine
or the Airframe and Engines or engines then installed on the
Airframe to a Permitted Lessee which is not the subject of a
petition filed under any bankruptcy laws or other insolvency
laws in effect at the time such lease is entered into, or any
other foreign air carrier; provided that in the case only of a
lease to a foreign air carrier that is not a Permitted Lessee,
the Indenture Trustee receives at the time of such lease an
opinion of counsel to the Company (which counsel shall be
reasonably satisfactory to the Indenture Trustee) to the
effect that there exist no possessory rights in favor of the
lessee under the laws of such sublessee's country which would,
upon bankruptcy or insolvency of or other default by the
Company and assuming that at such time such lessee is not
insolvent or bankrupt, prevent the return of such Engine or
the Airframe and such Engine or engine to the Indenture
Trustee in accordance with and when permitted by the terms of
Section 7.02 upon the exercise by the Indenture Trustee of its
remedies under Section 7.02;
provided that (1) the rights of any transferee who receives possession by reason
of a transfer permitted by this Section 4.01(b) (other than by a transfer of an
Engine which is deemed an Event of Loss) shall be subject and subordinate to all
the terms of this Indenture, (2) the Company shall remain primarily liable
hereunder for the performance of all the terms of this Indenture and all the
terms and conditions of this Indenture and the other applicable Operative
Agreements shall remain in effect and (3) no lease or transfer of possession
otherwise in compliance with this Section 4.01(b) shall (x) result in any
registration or reregistration of the Aircraft except to the extent permitted by
Section 4.01(e) or the maintenance, operation or use thereof except in
compliance with Sections 4.01(c) and 4.01(d), or (y) permit any action not
permitted to the Company hereunder.
In the case of any lease permitted under this Section 4.01(b), the
Company will include in such lease appropriate provisions which (a) make such
lease expressly subject and subordinate to all of the terms of this Indenture
including the rights of the Indenture Trustee to avoid such lease in the
exercise of its rights to repossession of the Airframe and Engines hereunder;
(b) expressly prohibit any subleasing of the Airframe
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and Engines; (c) require that the Airframe and Engines be maintained in
accordance with a maintenance program approved by the Aeronautical Authority
applicable thereto; (d) require the lessee to comply with the terms of Section
4.05 hereof; and (e) require that the Airframe and Engines be used in accordance
with the limitations applicable to the Company's possession and use provided in
this Indenture.
The Indenture Trustee hereby agrees for the benefit of the lessor or
secured party of any airframe (other than the Airframe) leased to the Company or
purchased by the Company subject to a conditional sale or other security
agreement, which lease or conditional sale or other security agreement also
covers an engine or engines owned by the lessor under such lease or subject to a
security interest in favor of the secured party under such conditional sale or
other security agreement, that the Indenture Trustee will not acquire or claim,
as against such lessor or secured party, any right, title or interest in any
such engine as the result of such engine being installed on the Airframe at any
time while such engine is owned by such lessor or is subject to such conditional
sale or other security agreement or security interest in favor of such secured
party.
(c) Operation and Use.
The Company shall not operate, use or locate the Airframe or any
Engine, or suffer such Airframe or any Engine to be operated, used or located
(i) in any area excluded from coverage by any insurance required by the terms of
Section 4.05 hereof, except in the case of a requisition by the United States of
America where the Company obtains indemnity from the Government against
substantially the same risks and for at least the amounts of the insurance
required by Section 4.05 hereof covering such area, or (ii) outside the United
States or Canada in any recognized or, in the Company's reasonable judgment,
threatened area of hostilities unless covered by war risk insurance, or in
either case unless the Airframe or such Engine is operated or used under
contract with the Government under which contract the Government assumes
liability for substantially the same risks in at least the same amounts as would
be covered by such insurance. So long as the Airframe or an Engine is subject to
the Lien of this Indenture, the Company shall not permit the Airframe or such
Engine to be used or operated in violation of any Applicable Law or in violation
of any airworthiness certificate, license or registration relating to the
Aircraft or such Engine issued by any competent governmental authority, unless
(i) the validity thereof is being contested in good faith and by appropriate
proceedings which do not involve a material danger of the sale, forfeiture or
loss of the Airframe or such Engine, or (ii) it is not possible for the Company
to comply with the laws of a jurisdiction other than the United States (or other
than any jurisdiction in which the Aircraft is then registered) because of a
conflict with the applicable laws of the United States (or such jurisdiction in
which the Aircraft is then registered).
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(d) Maintenance.
So long as the Airframe or an Engine is subject to the Lien of an
Indenture, the Company, at its own cost and expense, shall service, repair,
maintain, overhaul and test the Airframe and such Engine or cause the same to be
done in accordance with a maintenance program approved by the Aeronautical
Authority, and shall keep or cause to be kept the Airframe and such Engine in
such operating condition as may be necessary to enable the airworthiness
certification of the Aircraft to be maintained in good standing at all times
under the applicable rules and regulations of the Aeronautical Authority, except
when aircraft of the same type, model or series as the Airframe (powered by
engines of the same type as those with which the Airframe shall be equipped at
the time of grounding) registered in the same country have been grounded by the
Aeronautical Authority, provided, however, that if the airworthiness certificate
of the Aircraft shall be withdrawn, then, subject to Section 4.04 hereof, so
long as the Company is taking or causing to be taken all necessary action to
promptly correct the condition which caused such withdrawal, no Indenture
Default or Indenture Event of Default shall arise from such withdrawal. Nothing
herein shall be deemed to prevent the Company from taking the Aircraft out of
service for maintenance or modifications permitted hereunder or storage in
accordance with applicable Aeronautical Authority requirements and sound
practice for such storage. The Company shall maintain or cause to be maintained
all records, logs and other documents required by the Aeronautical Authority to
be maintained in respect of the Aircraft.
(e) Registration
Except as otherwise permitted by Section 4.02(b) of the
Participation Agreement, or as otherwise required by the Transportation Code or
rules, regulations, or orders promulgated thereunder, so long as the Airframe or
an Engine is subject to the Lien of an Indenture, the Aircraft shall be duly
registered in the name of the Company under the Transportation Code.
Section 4.02. Inspection
So long as the Airframe or an Engine is subject to the Lien of an
Indenture, at all reasonable times but upon at least 15 days' prior notice to
the Company and at a time and place reasonably acceptable to the Company, the
Indenture Trustee or its authorized representatives may at its own expense and
risk conduct a visual walk-around inspection of the Aircraft and any such Engine
(including a visual walk-around inspection of the Aircraft during any "C" check
or other heavy maintenance) and may inspect the books and records of the Company
relating to the operation and maintenance thereof; provided that (a) such
representatives shall be fully insured to the reasonable satisfaction of the
Company by the Indenture Trustee with respect to any risks incurred in
connection with any such inspection, (b) any such inspection shall be subject to
the safety, security and workplace rules applicable at the location where such
inspection is conducted and any applicable governmental rules or
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regulations, (c) in the case of an inspection during a maintenance visit, such
inspection shall not in any respect interfere with the normal conduct of such
maintenance visit or extend the time required for such maintenance visit or, in
any event, at any time interfere with the use or operation of the Airframe or
any Engine or with the normal conduct of the Company's or a permitted
sublessee's business, and (d) the Company shall not be required to undertake or
incur any additional liabilities in connection with any such inspection. All
information obtained in connection with any such inspection shall be held
confidential by the Indenture Trustee and shall not be furnished or disclosed by
the Indenture Trustee to anyone other than its bank examiners, auditors,
accountants, agents and legal counsel and except as may be required by an order
of any court or administrative agency or by any statute, rule, regulation or
order of any governmental authority or as may be necessary to enforce the terms
of this Indenture. The Indenture Trustee shall have no duty to make any such
inspection and shall not incur any liability or obligation by reason of not
making any such inspection.
Section 4.03. Replacement and Pooling of Parts; Alterations, Modifications and
Additions; Substitution of Engines.
(a) Replacement of Parts.
So long as the Airframe or an Engine is subject to the Lien of this
Indenture, except as otherwise provided in the proviso to the third sentence of
Section 4.03(d) or if the Airframe or an Engine to which a Part relates has
suffered an Event of Loss, the Company, at its own cost and expense, will
promptly replace all Parts that may from time to time become worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use for any reason whatsoever. In addition, in the ordinary
course of maintenance, service, repair, overhaul or testing, the Company, at its
own cost and expense, may remove any Parts, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use, provided that the Company, at its own cost and expense,
shall, except as otherwise provided in the proviso to the third sentence of
Section 4.03(d), replace such Parts as promptly as practicable with replacement
Parts or temporary replacement parts as provided in Section 4.03(c) hereof. All
replacement Parts shall be free and clear of all Liens except for pooling
arrangements to the extent permitted by Section 4.03(c) and Permitted Liens and
shall be in as good operating condition as, and shall have a value and utility
at least equal to, the Parts replaced assuming such replaced Parts were in the
condition and repair required to be maintained by the terms hereof.
(b) Subject to Lien.
Except as otherwise provided in the proviso to the third sentence of
Section 4.03(d), all Parts at any time removed from the Airframe or any Engine
shall remain and subject to the Lien of this Indenture, no matter where located,
until such time as such Parts shall be replaced by Parts that have been
incorporated or installed in or attached to such Airframe or Engine and that
meet the requirements for
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replacement Parts specified in Section 4.03(a). Immediately upon any replacement
Part becoming incorporated or installed in or attached to an Airframe or Engine
as provided in Section 4.03(a), without further act, (i) the replaced Part shall
thereupon be free and clear of the Lien of this Indenture and shall no longer be
deemed a Part hereunder; and (ii) such replacement Part shall become subject to
the Lien of this Indenture and be deemed part of such Airframe or Engine, as the
case may be, for all purposes hereof to the same extent as the Parts originally
incorporated or installed in or attached to such Airframe or Engine.
(c) Pooling or Parts Leasing.
Any Part removed from the Airframe or from any Engine as provided in
Section 4.03(a) may be subjected by the Company to a pooling or parts leasing
agreement or arrangement of a type customary in the airline industry entered
into in the ordinary course of the Company's business, provided the part
replacing such removed Part shall be incorporated or installed in or attached to
such Airframe or Engine in accordance with Sections 4.03(a) and 4.03(b) as
promptly as practicable after the removal of such removed Part. In addition, any
replacement part when incorporated or installed in or attached to the Airframe
or any Engine in accordance with Section 4.03(a) may be owned by another airline
or vendor as customary in the airline industry, subject to a pooling or parts
leasing arrangement, provided that the Company, at its expense within a
commercially reasonable time, either (i) causes title to such temporary
replacement part to become subject to the Lien of this Indenture, free and clear
of all Liens except Permitted Liens, at which time such temporary replacement
part shall become a Part or (ii) replaces such temporary replacement part by
incorporating or installing in or attaching to such Airframe or Engine a further
replacement Part owned by the Company free and clear of all Liens except
Permitted Liens and which will become subject to the Lien of this Indenture in
accordance with Section 4.03(b).
(d) Alterations, Modifications and Additions.
The Company, at its own expense, shall make alterations and
modifications in and additions to the Airframe and any Engine as may be required
to be made from time to time by Applicable Law regardless of upon whom such
requirements are, by their terms, nominally imposed; provided, that the Company
may, in good faith, contest the validity or application of any such standard in
any reasonable manner which does not materially adversely affect the lien of
this Indenture. In addition, the Company, at its own expense, may from time to
time make or cause to be made such alterations and modifications in and
additions to the Airframe and any Engine as the Company may deem desirable in
the proper conduct of its business (including, without limitation, removal of
Parts), provided further that no such alteration, modification or addition
diminishes, in the Company's reasonable judgment, the value, utility, condition
or airworthiness of such Airframe or Engine below the value, utility, condition
or airworthiness thereof immediately prior to such alteration, modification or
addition, assuming such Airframe or Engine was then in the condition
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required to be maintained by the terms hereof, except that the value (but not
the utility, condition or airworthiness) of the Aircraft may be reduced by the
value of Parts which the Company deems obsolete or no longer suitable or
appropriate for use in the Airframe or any Engine which shall have been removed
and not replaced, if the aggregate value of all such obsolete or unsuitable
Parts removed from the Aircraft and not replaced shall not exceed $300,000. All
Parts incorporated or installed in or attached or added to the Airframe or any
Engine as the result of any alteration, modification or addition effected by the
Company shall be free and clear of any Liens except Permitted Liens and become
subject to the Lien of this Indenture; provided that the Company may at any time
remove any such Part from the Airframe or an Engine if (i) such Part is in
addition to, and not in replacement of or in substitution for, any Part
originally incorporated or installed in or attached to such Airframe or Engine
on the Delivery Date or any Part in replacement of, or in substitution for, any
such original Part, (ii) such Part is not required to be incorporated or
installed in or attached or added to such Airframe or Engine pursuant to the
terms of Section 4.01(d) or the first sentence of this Section 4.03(d) and (iii)
such Part can be removed from such Airframe or Engine without diminishing or
impairing the value, condition, utility or airworthiness which such Airframe or
Engine would have had at the time of removal had such alteration, modification
or addition not been effected by the Company assuming the Aircraft was otherwise
maintained in the condition required by this Indenture. Upon the removal by the
Company of any such Part as above provided, title thereto shall be free and
clear of all rights of the Indenture Trustee and the Lien of this Indenture
shall no longer be deemed a Part hereunder.
(e) Substitution of Engines.
The Company shall have the right at its option at any time, on at
least 30 days' prior notice to the Indenture Trustee and the Indenture Trustee,
to substitute, and if an Event of Loss shall have occurred with respect to an
Engine, shall within 90 days of the occurrence of such Event of Loss and on at
least five days' prior notice to the Indenture Trustee substitute, a Replacement
Engine for any Engine not then installed or held for use on the Airframe. In
such event, immediately upon the effectiveness of such substitution on the date
set forth in such notice and without further act, (i) the replaced Engine shall
thereupon be released from the Lien of this Indenture and shall no longer be
deemed an Engine hereunder, and (iii) such Replacement Engine shall become
subject to the Lien of this Indenture and be deemed part of the Aircraft for all
purposes hereof to the same extent as the Engine originally installed on or
attached to the Airframe. Upon the substitution of a Replacement Engine, the
conditions set forth in Section 9.08 shall be satisfied at the Company's sole
cost and expense and the parties agree to cooperate with the Company to the
extent necessary to enable it to timely satisfy such conditions.
Upon satisfaction of all conditions to such substitution, (x) the
Indenture Trustee shall execute and deliver to the Company such documents and
instruments as the Company shall reasonably request to evidence the release of
such Engine from the Lien of this Indenture; (y) the Indenture Trustee shall
assign to the Company all claims
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it may have against any other Person relating to an Event of Loss giving rise to
such substitution and (z) the Company shall receive all insurance proceeds and
proceeds in respect of any Event of Loss giving rise to such replacement to the
extent not previously applied to the purchase price of the Replacement Engine as
provided in Sections 4.05(e)(i) and 4.04(e)(ii).
Section 4.04. Loss, Destruction or Requisition.
(a) Event of Loss with Respect to the Airframe.
Upon the occurrence of an Event of Loss with respect to the
Airframe, the Company shall forthwith (and in any event within 30 days after
such occurrence) give the Indenture Trustee notice of such Event of Loss. The
Company shall, within 60 days after such occurrence, give the Indenture Trustee
notice of its election to perform one of the following options (it being agreed
that if the Company shall not have given the Indenture Trustee such notice of
such election, the Company shall be deemed to have elected to perform the option
identified in the following clause (ii)):
(i) subject to the satisfaction of the closing
conditions contained in Section 9.08, on a date not more than
180 days after the occurrence of the Event of Loss, cause a
Replacement Airframe, (together with the same number of
Replacement Engines as the number of Engines, if any, which
were subject to such Event of Loss) to be subjected to the
Lien of this Indenture; provided that, if the Company shall
not perform its obligation to effect such replacement under
this clause (i) during the 180-day period of time provided
herein, it shall give the Indenture Trustee notice to such
effect upon or before the expiration of such period of time
and shall promptly pay on the first Business Day next
following the thirtieth (30th) day after the date of such
notice to the Indenture Trustee, in immediately available
funds, the amount specified in clause (ii) below; or
(ii) pay or cause to be paid to the Indenture Trustee in
immediately available funds on a date specified at least 30
days in advance by the Company, which date shall be a Business
Day not more than 180 days after the occurrence of the Event
of Loss, an amount equal to in immediately available funds,
for distribution to the holders as provided in Section 5.02,
an amount equal to the aggregate unpaid principal of the
Equipment Notes, together with accrued but unpaid interest
thereon to the date of payment, plus any other amounts then
payable hereunder to the Holders.
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(b) Effect of Replacement.
Should the Company have provided a Replacement Aircraft as provided
for in Section 4.04(a)(i) above, the Lien of this Indenture will cease with
respect to the replaced Airframe and any Engines installed thereon at the time
of such Event of Loss and the Indenture Trustee shall (i) execute and deliver to
the Company such documents and instruments, prepared at the Company's expense,
as the Company shall reasonably request to evidence (on the public record or
otherwise) the release of the Indenture Trustee's security interest in and to
the replaced Airframe and the Engine or Engines if any installed on the Airframe
at the time of the Event of Loss, (ii) assign to the Company all claims it may
have against any other Person arising from the Event of Loss and (iv) the
Company shall be entitled to receive all insurance proceeds and proceeds from
any award in respect of condemnation, confiscation, seizure or requisition,
including any investment interest thereon, to the extent not previously applied
to the purchase price of the Replacement Aircraft as provided in Sections
4.05(e)(iii) and 8(e)(i). Should the Company have provided a Replacement
Airframe, together with Replacement Engines, if any, all provisions of this
Indenture relating to the Airframe and Engine or Engines, if any, being replaced
shall be applicable to the Replacement Airframe and Replacement Engine or
Replacement Engines with the same force and effect.
(c) Effect of Payment.
In the event of a payment in full of the amounts payable as provided
in Section 4.04(a)(ii), (i) the Indenture Trustee shall execute and deliver to
the Company such documents and instruments, prepared at the Company's expense,
as the Company shall reasonably request to evidence (on the public record or
otherwise) the release of the Security Trustee's purchase money equipment
security interest in and to the replaced Airframe and the Engine or Engines if
any installed on the Airframe at the time of the Event of Loss; (ii) any
remaining insurance proceeds, including any investment interest thereon, shall
be promptly paid over to the Company; and (iii) the Indenture Trustee shall
convey to the Company all claims for damage to such Airframe and Engines, if
any, against third persons arising from the Event of Loss.
(d) Conditions to Airframe Replacement.
The Company's right to substitute a Replacement Aircraft as provided
in Section 4.04(a)(i) shall be subject to the fulfillment, at the Company's sole
cost and expense, in addition to the conditions contained in such Section
4.04(a)(i), of the conditions precedent set forth in Section 9.08.
(e) Non-Insurance Payments Received on Account of an Event of Loss.
As between the Indenture Trustee and the Company, any payments on
account of an Event of Loss (other than insurance proceeds or other payments the
application of which is provided for in this Section 4.04 or elsewhere in this
Indenture,
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as the case may be, or payments in respect of damage to the business or property
of the Company) with respect to the Aircraft, an Engine or any Part received at
any time by the Indenture Trustee or by the Company from any governmental
authority or other Person will be applied as follows:
(i) if such payments are received with respect to an
Event of Loss as to the Aircraft, and the Airframe or the
Airframe and the Engines or engines installed thereon are
being replaced by the Company pursuant to Section 4.04(a)(i),
such payments shall be paid over to, or retained by, the
Company, provided that if the Company has not completed such
replacement, such payments shall be paid over to, or retained
by, the Indenture Trustee as security, and upon completion of,
or in connection with a closing for, such replacement, be paid
over to or retained by the Company;
(ii) if such payments are received with respect to an
Event of Loss to an Engine or Part that has been or is being
replaced by the Company pursuant to the terms hereof, such
payments shall be paid over to, or retained by, the Company;
and
(iii) if such payments are received with respect to an
Event of Loss as to the Aircraft, and if the Airframe or the
Airframe and the Engines or engines installed thereon has not
been and will not be replaced as contemplated by Section
4.04(a), so much of such payments as shall not exceed the
amounts required to be paid by the Company pursuant to Section
4.04(a) hereof shall be applied in reduction of the Company's
obligation to pay such amounts, to the extent not already paid
by the Company, and, after all such amounts required to be
paid to the Indenture Trustee pursuant to Section 4.04(a)(ii)
above shall be paid in full, shall be paid over to the
Company.
(f) Requisition for Use.
In the event of a requisition for use by any government of the
Airframe and the Engines, if any, or engines installed on the Airframe, the
Company shall promptly notify the Indenture Trustee of such requisition and all
of the Company's obligations under this Indenture shall continue to the same
extent as if such requisition had not occurred except to the extent that the
performance or observance of any obligation by the Company shall have been
prevented or delayed by such requisition, provided that the Company's
obligations for the payment of money and under Section 4.05 (except while an
assumption of liability by the Government of the scope referred to in Section
4.01(c) is in effect) shall not be reduced or delayed by such requisition. Any
payments received by the Indenture Trustee or the Company from such government
with respect to such requisition of use shall be paid over to, or retained by,
the Company. In the event of an Event of Loss of an Engine resulting from the
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requisition for use by a government of such Engine (but not the Airframe), the
Company will replace such Engine hereunder by complying with the terms of
Section 4.03(e) and any payments received by the Indenture Trustee or the
Company from such government with respect to such requisition shall be paid over
to, or retained by, the Company.
(g) Certain Payments to be Held As Security.
Any amount referred to in this Section 4.04 or Section 4.05 hereof
which is payable to the Company shall not be paid to the Company, or, if it has
been previously paid directly to the Company, shall not be retained by the
Company, if at the time of such payment a Specified Default shall have occurred
and be continuing, but shall be paid to and held by the Indenture Trustee as
security for the obligations of the Company under this Indenture, and at such
time as there shall not be continuing any such Specified Default, such amount
and any gain realized as a result of Permitted Investments required to be made
pursuant to Section 5.08 shall be paid over to the Company.
Section 4.05. Insurance.
(a) Public Liability and Property Damage Insurance.
Subject to the rights of the Company under Section 4.05(d), so long
as the Airframe or an Engine is subject to the Lien of the Indenture, the
Company shall, without expense to the Indenture Trustee, maintain or cause to be
maintained in effect with insurers of recognized responsibility public liability
insurance (including, without limitation, passenger legal liability, property
damage and product liability coverage but excluding manufacturer's product
liability coverage) with respect to the Aircraft in an amount not less than the
Company may carry from time to time on other similar aircraft in its fleet but
not less than the Minimum Liability Amount; provided that an agreement of the
Government to insure against or indemnify for substantially the same risks to at
least the same amount shall satisfy the requirements of this Section 4.05(a).
Such insurance shall be of the type usually carried by the Company with respect
to similar aircraft and engines, and covering risks of the kind customarily
insured against by the Company.
During any period that the Aircraft is grounded and not in operation
for any reason, the Company may modify the insurance required by this Section
4.05(a)(i) to reduce the amounts of public liability and property damage
insurance and (ii) to modify the scope of the risks covered and the type of
insurance, in both circumstances to conform to such insurance customary in the
United States airlines industry for regional air carriers similarly situated
with the Company in respect of similar aircraft which are grounded, not in
operation, and stored or hangared, except that the amounts of coverage and scope
of risk covered and the type of insurance shall be the same as from time to time
applicable to aircraft owned or leased by Company on the ground, not in
operation, and stored or hangared.
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(b) Insurance Against Loss or Damage to the Aircraft and Engines.
Subject to the rights of the Company under Section 4.05(d), so long
as the Airframe or an Engine is subject to the Lien of the Indenture, the
Company shall, without expense to the Indenture Trustee, maintain or cause to be
maintained in effect at all times with insurers of recognized responsibility all
risk, agreed value, ground and flight hull insurance, which may exclude war
risks and allied perils, covering the Aircraft for an amount not less than the
Required Insurance Amount; provided that, neither the Company nor any Permitted
Lessee shall be required to maintain all-risk flight aircraft hull insurance
with respect to any period in which the Aircraft is grounded for any reason and
properly stored or hangared. Such hull insurance or other personal property
insurance of the Company shall cover Engines or engines and Parts temporarily
removed from the Airframe, pending replacement by installation of the same or
similar Engines, engines or Parts on the Airframe but such insurance need not
cover an Engine while attached to an airframe not owned, leased or operated by
the Company or a Permitted Lessee. Such insurance shall be of the type usually
carried by the Company or a Permitted Lessee with respect to similar aircraft
and engines, and covering risks of the kind customarily insured against by the
Company or such Permitted Lessee. If and to the extent that the Company or a
Permitted Lessee operates the Aircraft (A) on routes where it maintains war risk
insurance in effect with respect to other similar owned or leased aircraft in
its fleet, or (B) on routes (other than routes within the United States, Canada,
Mexico, Bermuda and islands other than Cuba in the Caribbean Basin) where the
custom in the industry is to carry war risk insurance, the Company shall
maintain or cause to be maintained such insurance in effect with respect to the
Aircraft in the lesser of an amount at least equal to the Required Insurance
Amount or the amount of such insurance customarily carried by corporations
engaged in the same or similar business similarly situated with the Company or
such Permitted Lessee and owning or operating similar aircraft and engines on
such routes or similar routes, provided that if the requirement to maintain war
risk insurance arises under clause (A) of this sentence, such insurance shall be
maintained in an amount not less than that maintained by the Company or such
Permitted Lessee on similar aircraft in its fleet. An agreement by the
Government to insure against or indemnify for substantially the same risks to at
least the same amount will satisfy any of the requirements of this Section
4.05(b).
(c) Additional Insureds: Loss Payment.
The Company shall cause all policies of insurance carried in
accordance with this Section 4.05 to name the Additional Insureds as their
respective interests may appear as additional insureds. Such policies shall
provide with respect to such Additional Insureds that (i) none of their
respective interests in such policies shall be invalidated by any act or
omission or breach of warranty or condition contained in such policies by the
Company or, in the case of any particular Additional Insured, any other
Additional Insured; (ii) no cancellation or lapse of coverage for nonpayment of
premium or otherwise, and no substantial change of coverage which adversely
affects the interests of any such Additional Insured, shall be effective as to
such Additional Insured
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until 30 days (or such lesser period as may be applicable in the case of any war
risk coverage) after receipt by such Additional Insured of written notice from
the insurers of such cancellation, lapse or change; (iii) they shall have no
liability for premiums, commissions, calls, assessments or advances with respect
to such policies; (iv) such policies will be primary without any right of
contribution from any other insurance carried by such Additional Insureds; and
(v) the insurers waive any rights of set-off, counterclaim, deduction or
subrogation against such Additional Insureds. Each liability policy shall
provide that all the provisions thereof, except the limits of liability, shall
operate in the same manner as if there were a separate policy covering each
insured and provide that the exercise by the insurer of rights of subrogation
derived from rights retained by the Company will not delay payment of any claim
that would otherwise be payable but for such rights of subrogation. Each hull
policy shall name the Indenture Trustee as loss payee as long as the Indenture
shall remain in effect; provided that, so long as the insurers shall not have
received written notice that an Indenture Event of Default has occurred and is
continuing, if insurance proceeds in the aggregate equal $2,000,000 or less,
then such proceeds shall be payable to the Company and, notwithstanding the
foregoing, any amounts up to the Required Insurance Amount (i) of any proceeds
which in the aggregate exceed $2,000,000, (ii) of any proceeds in respect of a
total loss or an Event of Loss or (iii) if the insurers shall have received
written notice that an Indenture Event of Default has occurred and is
continuing, any proceeds with respect to any single loss, shall be payable to
such loss payee.
(d) Deductibles and Self-Insurance.
The Company may from time to time self-insure, by way of deductible
or premium adjustment provisions in insurance policies or otherwise, the risks
required to be insured against pursuant to this Section 9 in such amounts as are
then self-insured with respect to similar owned or leased aircraft in the
Company's fleet but in no case shall such self-insurance in the aggregate exceed
$15,000,000 on a per occurrence or on fleetwide basis. A deductible per
occurrence that is not in excess of the prevailing standard market deductible
for similar aircraft, shall be permitted in addition to such self-insurance.
(e) Application of Hull Insurance Proceeds.
Subject to Section 4.04(g), as between the Indenture Trustee and the
Company, any payments received under policies of hull or other property
insurance required to be maintained by the Company pursuant to Section 4.05(b),
shall be applied as follows:
(i) if such payments are received with respect to loss
or damage (including an Event of Loss with respect to an
Engine) not constituting an Event of Loss with respect to the
Airframe, payments in the aggregate of $2,000,000 or less
shall be paid over to or retained by the Company and, subject
to Section 4.05(c), any payments which in the aggregate are
greater than $2,000,000 shall be paid over to or retained by
the Indenture Trustee for payment
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to the Company only upon performance of its repair or
replacement obligation;
(ii) if such payments are received with respect to an
Event of Loss with respect to the Airframe and the Airframe is
not being replaced by the Company pursuant to Section
4.04(a)(i), so much of such payments as shall not exceed the
Required Insurance Amount and other amounts required to be
paid by the Company pursuant to Section 4.04(a)(ii) shall be
applied in reduction of the Company's obligation to pay such
amounts if not already paid by the Company, and to reimburse
the Company if such amounts shall have been paid, and the
balance, if any, of such payments shall be promptly paid over
to or retained by the Company; and
(iii) if such payments are received with respect to the
Airframe or the Airframe and Engines or engines installed
thereon and the Airframe is being replaced by the Company
pursuant to Section 4.04(a)(i), such payments shall be paid
over to, or retained by the Company, provided that if the
Company has not completed such replacement, such payments
shall be paid over to, or retained by, the Indenture Trustee
as security, and upon completion of, or in connection with a
closing for, such replacement, be paid over to or retained by
the Company.
(f) Insurance for Own Account.
Nothing in this Section 9 shall prohibit the Company obtaining
insurance with respect to the Aircraft for its own account (including, without
limitation, hull insurance under the same policies maintained pursuant to this
Section 4.05 in amounts in excess of those required to be maintained pursuant to
this Section 4.05) and any proceeds payable thereunder shall be payable as
provided in the insurance policy relating thereto, provided that no such
insurance may be obtained which would limit or otherwise adversely affect the
availability of coverage or payment of any insurance required to be obtained or
maintained pursuant to this Section 4.05, it being understood that all salvage
rights to the Airframe or the Engines shall remain with the Company's insurers
at all times.
(g) Reports, etc.
So long as the Airframe or an Engine is subject to the Lien of the
Indenture, the Company will furnish to the Indenture Trustee evidence of renewal
of the insurance policies required pursuant to this Section 4.05 prior to the
cancellation, lapse or expiration of such insurance policies and, on or before
the renewal dates of the insurance policies carried by the Company pursuant to
this Section 4.05, a report signed by a firm of aircraft insurance brokers, not
affiliated with the Company, appointed by the Company, stating the opinion of
such firm that the insurance then carried and
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maintained on the Aircraft complies with the terms hereof and that such renewal
insurance will on and after the effective date thereof so comply with the terms
hereof, provided that all information contained in such report shall be held
confidential by the Indenture Trustee except, and shall not be furnished or
disclosed by them to anyone as may be required by Applicable Law. The Company
will instruct such firm to give prompt written advice to the Indenture Trustee
of any default in the payment of any premium and of any other act or omission on
the part of the Company of which it has knowledge and which would in such firm's
opinion invalidate or render unenforceable, in whole or in any material part,
any insurance on the Aircraft. The Company will also instruct such firm to
advise the Indenture Trustee in writing at least 30 days prior to the
termination or cancellation of, or material adverse change in, such insurance
carried and maintained on the Aircraft pursuant to this Section 4.05.
Section 4.06. Liens.
So long as the Airframe or an Engine is subject to the Lien of this
Indenture, the Company shall not directly or indirectly create, incur, assume or
suffer to exist any Lien on or with respect to the Airframe or any Engine or
title thereto or any interest therein or in this Indenture except (a) the Lien
of this Indenture and the rights of the parties to the other Operative
Agreements; (b) the rights of others under agreements or arrangements to the
extent expressly permitted in Sections 4.01(b) and 4.03(c); (c) Liens for Taxes
either not yet due or being contested in good faith by appropriate proceedings
so long as such proceedings do not involve a material danger of the sale,
forfeiture or loss of the Airframe or an Engine; (d) Liens of suppliers,
mechanics, workers, repairers, employees, airport operators, air traffic control
authorities or other like Liens arising in the ordinary course of business and
for amounts the payment of which is either not yet delinquent or is being
contested in good faith (and for the payment of which adequate reserves have
been provided) by appropriate proceedings, so long as such proceedings do not
involve a material danger of the sale, forfeiture or loss of the Airframe or an
Engine; (e) Liens arising out of judgments or awards against the Company with
respect to which at the time there shall have been secured a stay of execution;
(f) Indenture Trustee's Liens, (g) salvage and similar rights of insurers under
policies of insurance maintained with respect to the Aircraft and (h) Liens with
respect to which the Company (or any Permitted Lessee) has provided a bond or
other security adequate in the reasonable opinion of the Indenture Trustee.
Liens described in clauses (a) through (h) above are referred to herein as
"Permitted Liens." The Company shall promptly, at its own expense, take such
action as may be necessary to duly discharge (by bonding or otherwise) any Lien
other than a Permitted Lien arising at any time that the Lien of this Indenture
is in effect.
Section 4.07. Further Assurances.
The Company and the Indenture Trustee will each promptly and duly
execute and deliver to the other such further documents and assurances and take
such further action as the other may from time to time reasonably request in
order to more
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effectively carry out the intent and purpose of this Indenture and to establish
and protect the rights and remedies created or intended to be created in favor
of the Indenture Trustee and the Company hereunder, including, without
limitation, if requested by the Indenture Trustee or the Company, the execution
and delivery of supplements or amendments hereto, in recordable form, subjecting
any replacement or substituted aircraft or engine to this Indenture and the
recording or filing of counterparts hereof, or of financing statements with
respect hereto.
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
Section 5.01. Regular Distribution. Except as otherwise provided in
Section 5.03 hereof, each installment of principal and interest in respect of
the Equipment Notes shall be distributed by the Indenture Trustee no later than
the time herein provided in the following order of priority:
first, (i) so much of such installment or payment as shall be required to
pay in full the aggregate amount of principal and interest (as well
as any interest on any overdue principal and, to the extent
permitted by applicable law, on any overdue interest) then due under
all Series A Equipment Notes shall be distributed to the Holders of
Series A Equipment Notes ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments
then due under each Series A Equipment Note bears to the aggregate
amount of the payments then due under all Series A Equipment Notes;
(ii) after giving effect to paragraph (i) above, so much of such
installment or payment as shall be required to pay in full the
aggregate amount of the payment or payments of principal and
interest (as well as any interest on any overdue principal and, to
the extent permitted by applicable law, on any overdue interest)
then due under all Series B Equipment Notes shall be distributed to
the Holders of Series B Equipment Notes ratably, without priority of
one over the other, in the proportion that the amount of such
payment or payments then due under each Series B Equipment Note
bears to the aggregate amount of the payments then due under all
Series B Equipment Notes;
(iii) after giving effect to paragraph (ii) above, so much of such
installment or payment as shall be required to pay in full the
aggregate amount of the payment or payments of principal and
interest (as well as any interest on any overdue principal and, to
the extent permitted by applicable law, on any overdue interest)
then due under all Series C Equipment Notes shall be distributed to
the Holders of Series C
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Equipment Notes ratably, without priority of one over the other, in
the proportion that the amount of such payment or payments then due
under each Series C Equipment Notebears to the aggregate amount of
the payments then due under all Series C Equipment Notes.
(iv) after giving effect to paragraph (iii) above, so much of such
installment or payment as shall be required to pay in full the
aggregate amount of the payment or payments of principal and
interest (as well as any interest on any overdue principal and, to
the extent permitted by applicable law, on any overdue interest) and
then due under all Series D Equipment Notes shall be distributed to
the Holders of Series D Equipment Notes ratably, without priority of
one over the other, in the proportion that the amount of such
payment or payments then due under each Series D Equipment Note
bears to the aggregate amount of the payments then due under all
Series D Equipment Notes.
Section 5.02. Event of Loss and Replacement; Prepayment. (a) Except as
otherwise provided in Section 5.03 hereof, any payment received by the Indenture
Trustee as the result or in connection with of an Event of Loss with respect to
the Aircraft (and with respect to which the Company has not made the replacement
election in Section 4.04(a)(i)) or as the result of, or in connection with any
event giving rise to, a prepayment pursuant to Section 6.02 hereof, shall be
promptly distributed by the Indenture Trustee in the following order of
priority:
first, (a) to reimburse the Indenture Trustee for any costs or expenses
reasonably incurred in connection with such prepayment and (b) then
to pay any other similar amounts then due to the other Indenture
Indemnitees;
second, (i) to pay the amounts specified in paragraph (i) of clause "second"
of Section 5.03 hereof then due and payable in respect of the Series
A Equipment Notes;
(ii) after giving effect to paragraph (i) above, to pay the amounts
specified in paragraph (ii) of clause "second" of Section 5.03
hereof then due and payable in respect of the Series B Equipment
Notes;
(iii) after giving effect to paragraph (ii) above, to pay the
amounts specified in paragraph (iii) of clause "second" of Section
5.03 hereof then due and payable in respect of the Series C
Equipment Notes; and
(iv) after giving effect to paragraph (iii) above, to pay the
amounts specified in paragraph (iv) of clause "second" of Section
5.03 hereof then due and payable in respect of the Series D
Equipment Notes;
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provided, that payments pursuant to this clause "second" shall be
made without the payment of Make-Whole Premium; and
third, as provided in clause "third" of Section 5.03 hereof;
provided that if a Replacement Airframe shall be substituted for an Airframe
subject to an Event of Loss as provided in Sections 4.04(a)(i) and 9.08 hereof,
any proceeds which result from such Event of Loss and are paid to the Indenture
Trustee shall be held by the Indenture Trustee as part of the Collateral and,
unless otherwise applied pursuant to Section 5.01 or 5.03 hereof, such proceeds
shall be released to the Company upon the release of such damaged Airframe and
the replacement thereof as herein provided.
(b) Any amounts received directly or indirectly from any governmental
authority, insurer or other party pursuant to any provision of Section 4.04 or
4.05 hereof as the result of loss or damage not constituting an Event of Loss
with respect to the Aircraft, or as a result of such loss or damage constituting
an Event of Loss if and to the extent that such amounts would at the time be
required to be paid to the Company pursuant to Section 4.04 or 4.05 hereof but
for the fact that a Specified Default exists shall be held by the Indenture
Trustee as security for the obligations of the Company hereunder and shall be
invested in accordance with the terms of Section 5.08 hereof and at such time as
the conditions for payment to the Company specified in Section 4.04 or 4.05
hereof, as the case may be, shall be fulfilled and no Specified Default exists,
such amount, and the proceeds of any investment thereof, shall, to the extent
not theretofore applied, be paid to the Company.
Section 5.03. Payment After Indenture Event of Default, etc. Except as
otherwise provided in Sections 5.02(b), 5.04(b), 5.04(c) and 5.05 hereof, all
payments received and all amounts held or realized by the Indenture Trustee
after an Indenture Event of Default shall have occurred and so long as such an
Indenture Event of Default shall be continuing and the Equipment Notes shall
have become due and payable as provided in Section 7.02(b) or (c) hereof, shall
be promptly distributed by the Indenture Trustee in the following order of
priority:
first, so much of such payments or amounts as shall be required to pay or
reimburse (i) the Indenture Trustee for any tax (except to the
extent resulting from a failure of the Indenture Trustee to withhold
pursuant to Section 5.09 hereof), expense, charge or other loss
(including, without limitation, all amounts to be expended at the
expense of, or charged upon the tolls, rents, revenues, issues,
products and profits of, the property included in the Trust
Indenture Estate pursuant to Section 7.03(b) hereof) incurred by the
Indenture Trustee (to the extent not previously reimbursed) the
expenses of any sale, taking or other proceeding, attorneys' fees
and expenses, court costs, and any other expenditures incurred or
expenditures or advances made by the Indenture Trustee or the
Holders in the protection, exercise or enforcement of any right,
power
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or remedy or any damages sustained by the Indenture Trustee or the
Holders, liquidated or otherwise, upon such Indenture Event of
Default, shall be applied by the Indenture Trustee as between itself
and the Holders in reimbursement of such expenses and (ii) all
similar amounts payable to the other Indenture Indemnitees hereunder
and under the Participation Agreement; and in the case the aggregate
amount to be so distributed is insufficient to pay as set forth in
clauses (i) and (ii), then ratably, without priority of one over the
other, in proportion to the amounts owed each hereunder;
second, so much of such payment or amounts remaining as shall be required to
reimburse the then existing or prior Holders for payments made
pursuant to Section 9.03(d) hereof (to the extent not previously
reimbursed) shall be distributed to such then existing or prior
Holders ratably, without priority of one over the other, in
accordance with the amount of the payment or payments made by each
such then existing or prior Holder pursuant to said Section 9.03(d)
hereof;
third, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid principal amount of all
Series A Equipment Notes, and the accrued but unpaid interest and
other amounts due thereon and all other Secured Obligations (other
than Make-Whole Premium) in respect of the Series A Equipment Notes
to the date of distribution, shall be distributed to the Holders of
Series A Equipment Notes, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion
that the aggregate unpaid Principal Amount of all Series A Equipment
Notes held by each Holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder (other than Make-Whole
Premium) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series A Equipment Notes held by all such
Holders plus the accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Premium) to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in full
the aggregate unpaid principal amount of all Series B Equipment
Notes, and the accrued but unpaid interest and other amounts due
thereon and all other Secured Obligations (other than Make-Whole
Premium) in respect of the Series B Equipment Notes to the date of
distribution, shall be distributed to the Holders of Series B
Equipment Notes, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion
that the aggregate unpaid Principal Amount of all Series B Equipment
Notes held by each Holder plus the accrued but unpaid interest and
other amounts
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due hereunder or thereunder (other than Make-Whole Premium) to the
date of distribution, bears to the aggregate unpaid Principal Amount
of all Series B Equipment Notes held by all such Holders plus the
accrued but unpaid interest and other amounts due thereon (other
than Make-Whole Premium) to the date of distribution;
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in full
the aggregate unpaid principal amount of all Series C Equipment
Notes, and the accrued but unpaid interest and other amounts due
thereon and all other Secured Obligations (other than Make-Whole
Premium) in respect of the Series C Equipment Notes to the date of
distribution, shall be distributed to the Holders of Series C
Equipment Notes, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion
that the aggregate unpaid Principal Amount of all Series C Equipment
Notes held by each Holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder (other than Make-Whole
Premium) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series C Equipment Notes held by all such
Holders plus the accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Premium) to the date of distribution;
and
(iv) after giving effect to paragraph (iii) above, so much of such
payments or amounts remaining as shall be required to pay in full
the aggregate unpaid principal amount of all Series D Equipment
Notes, and the accrued but unpaid interest and other amounts due
thereon and all other Secured Obligations (other than Make-Whole
Premium) in respect of the Series D Equipment Notes to the date of
distribution, shall be distributed to the Holders of Series D
Equipment Notes, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion
that the aggregate unpaid Principal Amount of all Series D Equipment
Notes held by each Holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder (other than Make-Whole
Premium) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series D Equipment Notes held by all such
Holders plus the accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Premium) to the date of distribution;
(it being understood that amounts payable under this clause "second"
shall not in any event include Make-Whole Premium); and
fourth, the balance, if any of such payments or amounts remaining thereafter
shall be distributed to the Company.
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Section 5.04. Certain Payments. Notwithstanding anything to the contrary
contained in this Article V, the Indenture Trustee will distribute, promptly
upon receipt, any indemnity or other payment received by it from the Company in
respect of (i) the Indenture Trustee in its individual capacity, (ii) the
Subordination Agent, (iii) each Liquidity Provider, (iv) the Pass-Through
Trustee and (v) any other Indenture Indemnitees, in each case pursuant to
Article 7 of the Participation Agreement, directly to the Person (which may
include the Indenture Trustee) entitled thereto. Any payment received by the
Indenture Trustee under clause (b) of the last paragraph of Section 2.04 shall
be distributed to the Subordination Agent to be distributed in accordance with
the terms of the Intercreditor Agreement.
Section 5.05. Other Payments. Any payments received by the Indenture
Trustee for which no provision as to the application thereof is made elsewhere
in this Indenture shall be distributed by the Indenture Trustee (a) to the
extent received or realized at any time prior to the payment in full of all
obligations to the Holders, in the order of priority specified in Section 5.01
hereof, and (b) to the extent received or realized at any time after payment in
full of all obligations to the Holders, in the following order of priority:
first, in the manner provided in clause "first" of Section 5.03 hereof, and
second, in the manner provided in clause "third" of Section 5.03 hereof.
Section 5.06. [Reserved]
Section 5.07. Application of Payments. Each payment of principal of and
interest or other amounts due on each Equipment Note shall, except as otherwise
provided herein, be applied,
first, to the payment of interest on such Equipment Note due and payable to
the date of such payment, as provided in such Certificate, as well
as any interest on overdue principal and Make-Whole Premium, if any,
and, to the extent permitted by law, interest and other amounts due
thereunder,
second, to the payment of any other amount (other than the principal of such
Equipment Note), including any Make-Whole Premium, due hereunder or
under such Equipment Note to such Holder; and
third, to the payment of the principal of such Equipment Note if then due
hereunder or under such Equipment Note.
Section 5.08. Investment of Amounts Held by Indenture Trustee. Amounts
held by the Indenture Trustee pursuant to Section 5.02(b) hereof or otherwise to
be invested pursuant to this Section 5.08 shall be invested by the Indenture
Trustee from time to time in securities selected by (i) so long as no Indenture
Event of Default shall have occurred and be continuing, the Company (and in the
absence of written direction
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by the Company, the Indenture Trustee shall invest such monies in direct
obligations of the United States of America) or (ii) so long as an Indenture
Event of Default shall have occurred and be continuing, the Indenture Trustee
and in each case shall be of the type meeting the criteria for Permitted
Investments. Unless otherwise expressly provided in this Indenture, any income
realized as a result of any such investment, net of the Indenture Trustee's
reasonable fees and expenses in making such investment, shall be held and
applied by the Indenture Trustee in the same manner as the principal amount of
such investment is to be applied and any losses, net of earnings and such
reasonable fees and expenses, shall be charged against the principal amount
invested. The Company shall be responsible for and will promptly pay to the
Indenture Trustee, on demand, the amount of any loss realized as the result of
any such investment (together with any fees, commissions and other costs and
expenses, if any, incurred by the Indenture Trustee in connection with such
investment), such amount to be disposed of in accordance with the terms hereof.
The Indenture Trustee shall not be liable for any loss resulting from any
investment made by it or any investment sold by it under this Indenture in
accordance with instructions from the Company other than by reason of its
willful misconduct or gross negligence, and any such investment may be sold
(without regard to its maturity) by the Indenture Trustee without instructions
whenever the Indenture Trustee reasonably believes such sale is necessary to
make a distribution required by this Indenture.
Unless otherwise confirmed in writing, an account statement delivered by
the Indenture Trustee to the Company shall be deemed written confirmation by the
Company that the investment transactions identified therein accurately reflect
the investment directions given to the Indenture Trustee by the Company unless
the Company notifies the Indenture Trustee in writing to the contrary within 30
days of the date of receipt of such statement.
Section 5.09. Withholding Taxes The Indenture Trustee, as agent for the
Company, shall exclude and withhold from each payment of principal, premium, if
any, and interest and other amounts due hereunder or under the Equipment Notes,
and any and all withholding taxes applicable thereto as required by law. The
Indenture Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future taxes or similar charges are required
to be withheld with respect to any amounts payable in respect of the Equipment
Notes, it will withhold such amounts and timely pay the same to the appropriate
authority in the name of and on behalf of the Holders, it will file any
necessary withholding tax returns or statements when due, and that, as promptly
as possible after the payment thereof, it will deliver to each Holder
appropriate documentation showing the payment thereof, together with such
additional documentary evidence as such Holder may reasonably request from time
to time.
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ARTICLE VI
PREPAYMENT OF EQUIPMENT NOTES
Section 6.01. No Prepayment Except as Specified. Except as provided in
Sections 6.02, the Equipment Notes may not be prepaid.
Section 6.02. Prepayment of Equipment Notes. (a) The Outstanding Equipment
Notes shall be prepaid in full and not in part:
(i) If an Event of Loss occurs with respect to the Airframe or
with respect to the Airframe and the Engines or engines then installed on
the Airframe (unless pursuant to Section 4.04(a)(i) replacement equipment
is substituted therefor).
(ii) At the option of the Company, upon not less than 25 days'
prior written notice.
(b) In the case of a prepayment of the Equipment Notes pursuant to Section
6.02(a)(i) above, the Equipment Notes shall be prepaid in full on the date as
specified in Section 4.04(a)(ii). In the case of a prepayment of the Equipment
Notes pursuant to Section 6.02(a)(ii) above, the Equipment Notes shall be
prepaid on the date designated in the notice referred to therein. The day on
which the Equipment Notes are to be prepaid pursuant to this Section 6.01(b) is
herein referred to as the "Prepayment Date".
On or prior to the Prepayment Date, immediately available funds shall be
deposited with the Indenture Trustee in an amount in respect of the Equipment
Notes equal to:
(1) if such prepayment is made pursuant to Section 6.02(a)(i)
the sum of (A) the aggregate principal amount of such Equipment Notes then
Outstanding, (B) accrued interest on the Equipment Notes to the Prepayment
Date and (C) all other aggregate sums due the Indenture Trustee hereunder
or under the Participation Agreement, but excluding any Make-Whole Premium
or other premium or penalty, or
(2) if such prepayment is made pursuant to Section
6.02(a)(ii), the sum of the amounts specified in clauses (A), (B) and (C)
of the preceding clause (1) plus any Make-Whole Premium payable in respect
of all Equipment Notes
(the aggregate amount required to be paid pursuant to this sentence being herein
referred to as the "Prepayment Price").
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Section 6.03. Notice of Prepayment to Holders. In order to effect any
prepayment set forth in Section 6.02(a) hereof, the Indenture Trustee shall give
prompt notice by first class mail of prepayment to each Holder. Any notice of
prepayment given by the Company may be revoked by the Company at any time on or
before the Prepayment Date by prompt notice to the Holders.
All notices of prepayment shall state: (1) the Prepayment Date, (2) the
applicable basis for determining the Prepayment Price, (3) that on the
Prepayment Date, subject to the provisions hereof, the Prepayment Price will
become due and payable, and that interest on the Equipment Notes shall cease to
accrue on and after such Prepayment Date, and (4) the place or places where such
Equipment Notes are to be surrendered for payment.
Section 6.04. Deposit of Prepayment Price. On the Prepayment Date, the
Company shall, to the extent an amount equal to the Prepayment Price, as the
case may be, shall not then be held in cash by the Indenture Trustee in
immediately available funds and deposited for the purpose, pay to the Indenture
Trustee an amount equal to the difference between (a) the amount then so held
and (b) the Prepayment Price. If there shall so be on deposit and/or deposited
the applicable Prepayment Price on or prior to a Prepayment Date, interest shall
cease to accrue in respect of all the Outstanding Equipment Notes on and after
such Prepayment Date.
Section 6.05. Equipment Notes Payable on Prepayment Date. On the
Prepayment Date, the Outstanding Equipment Notes shall (except (A) if the
Company has requested the Indenture Trustee to revoke such notice of prepayment
in accordance with Section 6.03 hereof) become due and payable and from and
after such Prepayment Date (unless there shall be a default in the payment of
the Prepayment Price) such Equipment Notes shall cease to bear interest. Upon
surrender by any Holder of its Equipment Note for prepayment in accordance with
said notice, such Holder shall be paid the principal amount of its Equipment
Note then outstanding, accrued interest thereon to the Prepayment Date, all
other sums due to such Holder hereunder, plus, if a Make-Whole Premium is
payable pursuant to Section 6.02(b) hereof, the Make-Whole Premium in respect
of such Equipment Note.
If any Equipment Note called for prepayment shall not be so paid upon
timely surrender thereof for prepayment, the principal shall, until paid,
continue to bear interest from the Prepayment Date at the interest rate
applicable to such Equipment Note.
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ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
Section 7.01. Indenture Event of Default. "Indenture Event of Default"
means any of the following events (whatever the reason for such Indenture Event
of Default and whether it shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the failure of the Company (i) to pay principal, interest
or Make-Whole Premium, if any, on any Equipment Note when due, and such
failure shall have continued unremedied for ten Business Days after the
date when due or (ii) to pay any other amounts hereunder or under the
Equipment Notes when due and such failure shall have continued unremedied
for a period of 30 days after the Company shall receive written demand
therefor from the Indenture Trustee or by the Holders of not less than 25%
in aggregate principal amount of Outstanding Equipment Notes; or
(ii) (A) any representation or warranty made the Company, in
any Operative Agreement or in any certificate the Company, furnished to
the Indenture Trustee or any Holder in connection herewith or therewith or
pursuant hereto or thereto shall prove to have been incorrect in any
material respect when made and was and remains in any respect material to
the Holders and such misrepresentation shall not have been corrected
within 30 days following notice thereof identified as a "Notice of
Indenture Event of Default" being given to the Company by the Indenture
Trustee or by a Majority in Interest of Certificate Holders, unless such
misrepresentation is capable of being corrected, and Company shall, after
the delivery of such notice, be diligently proceeding to correct such
misrepresentation and shall in fact correct such misrepresentation within
180 days after delivery of such notice; or
(iii) any covenant made by the Company shall be breached in
any material respect and such breach shall remain unremedied for a period
of 30 days after there has been given to the Company by a Majority in
Interest Holders a written notice identified as a "Notice of Indenture
Event of Default" specifying such breach and requiring it to be remedied
unless such failure is curable and the Company shall, after the delivery
of such notice, be diligently proceeding to correct such failure and shall
in fact correct such failure 180 days after delivery of such notice; or
(iv) the Company shall file any petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment,
liquidation,
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dissolution or similar relief under any present or future bankruptcy,
insolvency or similar statute, law or regulation;
(v) an order for relief shall be entered in respect of the
Company by a court having jurisdiction in the premises in an involuntary
case under the federal bankruptcy laws as now or hereafter in effect; or
the Company shall file any answer admitting or not contesting the material
allegations of a petition filed against the Company in any proceeding
referred to in clause (vi) below or seek or consent or acquiesce in the
appointment of any trustee, custodian, receiver or liquidator of the
Company or of all or any substantial part of its properties; or
(vi) without the consent or acquiescence of the Company an
order shall be entered constituting an order for relief or approving a
petition for relief or reorganization or any other petition seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or other similar relief under any present or future
bankruptcy, insolvency or similar statute, law or regulation, or if any
such petition shall be filed against the Company and such petition shall
not be dismissed within 60 days, or if, without the consent or
acquiescence of the Company as the case may be, an order shall be entered
appointing a trustee, custodian, receiver or liquidator of the Company or
of all or any substantial part of the properties of the Company and such
order shall not be dismissed within 60 days;
Section 7.02. Remedies. (a) If an Indenture Event of Default shall have
occurred and be continuing and so long as the same shall be continuing
unremedied, then and in every such case, the Indenture Trustee may, and when
required by the provisions of Article IX or Section 7.02(c) hereof, shall (i)
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article VII. The Indenture Trustee may take possession
of all or any part of the properties covered or intended to be covered by the
Lien and security interest created hereby or pursuant hereto and may exclude the
Company, and any transferee of the Company (subject to Section 15.05 hereof),
and all Persons claiming under any of them wholly or partly therefrom. In
addition, the Indenture Trustee may (subject to the provisions of the next
succeeding paragraph) exercise any other right or remedy in lieu of or in
addition to the foregoing that may be available to it under applicable law, or
proceed by appropriate court action to enforce the terms hereof. Without
limiting any of the foregoing, it is understood and agreed that the Indenture
Trustee may exercise any right of sale of the Aircraft available to it, even
though it shall not have taken possession of the Aircraft and shall not have
possession thereof at the time of such sale.
(b) If an Indenture Event of Default under clause (iv), (v) or (vi) of
Section 7.01 hereof shall occur and be continuing, the unpaid principal of all
Outstanding Equipment Notes, together with interest accrued but unpaid thereon
and all other amounts due thereunder, but without Make-Whole Premium, shall
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immediately become due and payable, without presentment, demand, protest or
notice, all of which are hereby waived.
(c) If any Indenture Event of Default not described in the preceding
paragraph (b) shall have occurred and be continuing, then and in every such
case, the Indenture Trustee may on its own accord or at the direction of a
Majority in Interest of Holders, at any time, by written notice to the Company,
declare the principal of all the Equipment Notes to be due and payable,
whereupon the unpaid principal amount of all Outstanding Equipment Notes,
together with accrued interest thereon and all other amounts due thereunder, but
without Make-Whole Premium, shall immediately become due and payable without
presentment, demand, protest or other notice, all of which are hereby waived. At
any time after such declaration and prior to the sale or disposition of the
Trust Indenture Estate, however, a Majority in Interest of Holders by notice to
the Company may rescind such declaration, whether made by the Indenture Trustee
on its own accord or as directed, if (x) there has been paid or deposited with
the Indenture Trustee a sum sufficient to pay all overdue installments of
interest on all Equipment Notes (together, to the extent permitted by law, with
interest on such overdue installments of interest), the principal on any
Equipment Notes that would have become due otherwise than by such declaration of
acceleration, all sums paid or advanced by the Indenture Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel, or (y) all Indenture Events of
Default (other than the nonpayment of principal that has become due solely
because of such acceleration) have been either cured or waived as provided in
Section 7.11 hereof. No such rescission shall affect any subsequent default or
impair any right consequent thereon.
(d) Each Holder shall be entitled at any sale to credit against any
purchase price bid at such sale by such Holder all or any part of the unpaid
obligations owing to such Holder secured by the Lien of this Indenture (but only
to the extent that an amount equal to such purchase price would have been paid
to such Holder pursuant to Article V hereof if such purchase price were paid in
cash and the foregoing provisions of this subsection (d) were not given effect).
(e) In the event of any sale of the Collateral, or any part thereof,
pursuant to any judgment or decree of any court or otherwise in connection with
the enforcement of any of the term of this Indenture, the unpaid principal
amount of all Equipment Notes then outstanding, together with accrued interest
thereon (without Make-Whole Amount), and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(f) Notwithstanding anything contained herein, so long as the Pass Through
Trustee under any Pass Through Trust Agreement (or its designee) is a Holder,
the Indenture Trustee will not be authorized or empowered to acquire title to
the Trust Indenture Estate or take any action with respect to the Trust
Indenture Estate so acquired by it if such acquisition or action would cause any
Trust to fail to qualify as a "grantor trust" for federal income tax purposes.
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Section 7.03. Return of Aircraft, etc. (a) Subject to Section 7.02 hereof,
if an Indenture Event of Default shall have occurred and be continuing, at the
request of the Indenture Trustee, the Company shall promptly execute and deliver
to the Indenture Trustee such documents as the Indenture Trustee may reasonably
deem necessary or advisable to enable the Indenture Trustee or an agent or
representative designated by the Indenture Trustee, at such time or times and
place or places as the Indenture Trustee may specify, to obtain possession of
all or any part of the Collateral to which the Indenture Trustee shall at the
time be entitled under this Indenture. Subject to the foregoing, if the Company
shall for any reason fail to execute and deliver such documents after such
request by the Indenture Trustee, the Indenture Trustee may pursue all or part
of such wherever it may be found and enter any of the premises of the Company
wherever such Collateral may be or be supposed to be and search for such
Collateral and take possession of and remove such Collateral. All expenses of
pursuing, searching for and taking such Collateral shall, until paid, be secured
by the Lien of this Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may, from
time to time, at the expense of the Company, make all such expenditures for
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, modification, alterations and repairs to and of the Collateral, as
the Indenture Trustee may reasonably deem proper. In each case subject to
Section 7.02 hereof, the Indenture Trustee shall have the right to maintain,
use, operate, store, insure, lease, dispose of, modify, alter, control or manage
the Collateral and to carry on the business and to exercise all rights and
powers of the Company relating to the Collateral as the Indenture Trustee may
reasonably deem best, including the right to enter into any and all such
agreements with respect to the maintenance, use, operation insurance, storage,
leasing, control, management, modification, alteration or disposition of all or
any part of the Trust Indenture Estate as the Indenture Trustee may determine.
Further, the Indenture Trustee shall be entitled to collect and receive directly
all tolls, rents, revenues, issues, income, products and profits of the
Collateral and every part thereof, without prejudice, however, to the right of
the Indenture Trustee under any provision of this Indenture to collect and
receive all cash held by, or required to be deposited with, the Indenture
Trustee under this Indenture. Such tolls, rents, revenues, issues, income,
products and profits shall be applied to pay the expenses of the use, operation,
storage, insurance, leasing, control, management, modification, alteration or
disposition of the Collateral and of all maintenance and repairs, and of
conducting the business thereof, and to make all payments which the Indenture
Trustee may be required or may reasonably elect to make for any taxes,
assessments, insurance or other proper charges upon the Collateral (including
the employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the Company), and all other
payments which the Indenture Trustee may be required or authorized to make under
any provision of this Indenture, as well as just and reasonable compensation for
the services of the Indenture Trustee and of all persons properly engaged and
employed for such purposes by the Indenture Trustee; provided, that any excess
amounts shall be promptly distributed in accordance with Section 5.03 hereof.
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(c) Subject to Section 7.02 hereof, if an Indenture Event of Default shall
have occurred and be continuing and the Indenture Trustee shall be entitled to
exercise remedies hereunder, the Indenture Trustee, either with or without
taking possession, and either before or after taking possession, and without
instituting any legal proceedings whatsoever, may sell, assign, transfer and
deliver the whole or, from time to time, to the extent permitted by law, any
part of the Collateral, or any part thereof, or interest therein, at any private
sale or public auction to the highest bidder, with or without demand,
advertisement or notice, except that in respect of any private sale 30 days'
prior written notice by registered mail to the Company will be provided, for
cash or, with the consent of the Company, credit or for other property, for
immediate or future delivery, and for such price or prices and on such terms as
the Indenture Trustee in exercising reasonable commercial discretion may
determine; provided, that any such action shall be at the time lawful and that
all mandatory legal requirements shall be complied with. Any notice required
pursuant to the terms hereof in the case of a public sale, shall state the time
and place fixed for such sale. Any such public sale shall be held at such time
or times within ordinary business hours as the Indenture Trustee shall fix in
the notice of such sale. At any such sale, the Collateral may be sold in one lot
as an entirety or in separate lots. The Indenture Trustee shall not be obligated
to make any sale pursuant to such notice. The Indenture Trustee may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
such sale, and any such sale may be made at any time or place to which the same
may be so adjourned without further notice or publication. The Indenture Trustee
may exercise such right of sale without possession or production of the
Equipment Notes or proof of ownership thereof, and as representative of the
Holders may exercise such right without notice to the Holders or without
including the Holders as parties to any suit or proceedings relating to the
foreclosure of any part of the Collateral. The Company shall execute any and all
such bills of sale, assignments and other documents, and perform and do all
other acts and things requested by the Indenture Trustee in order to permit
consummation of any sale of the Collateral in accordance with this Section
7.03(c) and to effectuate the transfer or conveyance referred to in the first
sentence of this Section 7.03(c). Notwithstanding any other provision of this
Indenture, the Indenture Trustee shall not sell the Collateral or any part
thereof unless the Equipment Notes shall have been accelerated.
(d) To the extent permitted by Applicable Law, and subject to Section 7.02
hereof, the Indenture Trustee or any Holder may be a purchaser of the or any
part thereof or any interest therein at any sale thereof, whether pursuant to
foreclosure or power of sale or otherwise. The Indenture Trustee may apply
against the purchase price therefor the amount then due hereunder or under any
of the Equipment Notes secured hereby and any Holder may apply against the
purchase price therefor the amount then due to it hereunder or under the
Equipment Notes held by such Holder to the extent of such portion of the
purchase price as it would have received had it been entitled to share any
distribution thereof. The Indenture Trustee or any Holder or nominee thereof
shall, upon any such purchase, acquire good title to the property so purchased,
free of
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the Lien of this Indenture and, to the extent permitted by applicable law, free
of all rights of redemption in the Company in respect of the property so
purchased.
(e) The Indenture Trustee shall, as a matter of right, be entitled to the
appointment of a receiver (who may be the Indenture Trustee or any successor or
nominee) for all or any part of the Collateral, whether such receivership be
incidental to a proposed sale of the Collateral or the taking of possession
thereof or otherwise, and the Company hereby consents to the appointment of such
receiver and will not oppose any such appointment. Any receiver appointed for
all or any part of the Collateral shall be entitled to exercise all of the
rights and powers of the Indenture Trustee with respect to the Collateral.
(f) Subject to the provisions of this Indenture, to the extent permitted
by Applicable Law, upon the occurrence and during the continuation of an
Indenture Event of Default the Company irrevocably appoints the Indenture
Trustee the true and lawful attorney-in-fact of the Company (which appointment
is coupled with an interest) in its name and stead and on its behalf, for the
purpose of effectuating any sale, assignment, transfer or delivery for the
enforcement of the Lien of this Indenture, whether pursuant to foreclosure or
power of sale, assignments and other instruments as may be necessary or
appropriate, with full power substitution, the Company hereby ratifying and
confirming all that such attorney or any substitute shall do by virtue hereof in
accordance with applicable law. Nevertheless, if so requested by the Indenture
Trustee or any purchaser, the Company shall ratify and confirm any such sale,
assignment, transfer or delivery, by executing and delivering to the Indenture
Trustee or such purchaser all bills of sale, assignments, releases and other
proper instruments to effect such ratification and confirmation as may be
designated in any such request.
Section 7.04. Indenture Trustee May Prove Debt. If the Company shall fail
to pay any amount payable hereunder or under the Equipment Notes, the Indenture
Trustee, in its own name and as trustee of an express trust, shall be entitled
and empowered to institute any action or proceedings at law or in equity for the
collection of the sums so due and unpaid, and may prosecute any such action or
proceedings to judgment or final decree, and may enforce any such judgment or
final decree against the Company and collect in the manner provided by law out
of the property of the Company wherever situated, the moneys adjudged or decreed
to be payable; provided, that any sale of any portion of the Collateral shall be
done in accordance with Sections 7.02 and 7.03(c) hereof.
In case there shall be pending proceedings relative to the Company under
the Bankruptcy Code or any other applicable Federal or state bankruptcy,
insolvency or other similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official shall
have been appointed for or taken possession of the Company or its property, or
in case of any other comparable judicial proceedings relative to the Company, or
to the creditors or property of the Company, the Indenture Trustee, irrespective
of whether the principal of the
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Equipment Notes shall then be due and payable as therein or herein expressed or
by declaration or otherwise and irrespective of whether the Indenture Trustee
shall have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount
of principal, interest and other amounts owing and unpaid in respect of
the Equipment Notes or hereunder, and to file such other papers or
documents as may be necessary or advisable in order to have the claims of
the Indenture Trustee (including any claim for reasonable compensation to
the Indenture Trustee and each predecessor Indenture Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of the
Indenture Trustee and each predecessor Indenture Trustee, except as a
result of negligence or bad faith) and of the Holders allowed in any
judicial proceedings relative to the Company or to the creditors or
property of the Company,
(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other bankruptcy or
insolvency proceedings or person performing similar functions in
comparable proceedings, and
(c) to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute all amounts
received with respect to the claims of the Holders and of the Indenture
Trustee on their behalf;
and any trustee, receiver, or liquidator, custodian or other similar official is
hereby authorized by each of the Holders to make payments to the Indenture
Trustee, and, in the event that the Indenture Trustee shall consent to the
making of payments directly to the Holders, to pay to the Indenture Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents,
attorneys and counsel, and all other expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture Trustee
except as a result of negligence or willful misconduct.
Nothing contained herein shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Equipment Notes or the rights of any Holder thereof, or to
authorize the Indenture Trustee to vote in respect of the claim of any Holder in
any such proceeding except, as aforesaid, to vote for the election of a trustee
in bankruptcy or similar person.
All rights of action and rights to assert claims under this Indenture, or
under any of the Equipment Notes, may be enforced by the Indenture Trustee
without the possession of such Equipment Notes. Any trial or other proceedings
instituted by the
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Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders, as provided herein.
In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party) the Indenture Trustee shall be
held to represent all the Holders of the Equipment Notes, and it shall not be
necessary to make any Holders parties to such proceedings.
Section 7.05. Remedies Cumulative. Each and every right, power and remedy
given to the Indenture Trustee in this Indenture shall be cumulative and shall
be in addition to every other right, power and remedy specifically given herein
or now or hereafter existing at law, in equity or by statute, and each and every
right, power and remedy whether specifically given herein or otherwise existing
may be exercised from time to time and as often and in such order as may be
deemed expedient by the Indenture Trustee or the Holders, and the exercise or
the beginning of the exercise of any power or remedy shall not be construed to
be a waiver of the right to exercise at the same time or later any other right,
power or remedy. No delay or omission by the Indenture Trustee or of any Holder
in the exercise of any right, remedy or power or in the pursuance of any remedy
shall impair any such right, power or remedy or be construed to be a waiver of
any default on the part of the Company or to be an acquiescence in any such
default.
Section 7.06. Suits for Enforcement. If an Indenture Event of Default has
occurred, has not been waived and is continuing, the Indenture Trustee may in
its discretion and subject to its rights of appropriate indemnification under
Sections 7.09 and 9.03 and Article XI hereof proceed to protect and enforce its
rights and rights of the Holders by such appropriate judicial proceedings as the
Indenture Trustee shall deem most effectual to protect and enforce any of such
rights, either at law or in equity or in bankruptcy or otherwise, whether for
the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture or to
enforce any other legal or equitable right vested in the Indenture Trustee or
the Holders by this Indenture or by law; provided that, any sale of any portion
of the Trust Indenture Estate shall be done in accordance with Sections 7.02 and
7.03(c) hereof.
Section 7.07. Discontinuance of Proceedings. In case the Indenture Trustee
or any Holder shall have instituted any proceeding to enforce any right, power
or remedy under this Indenture by foreclosure, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee or such Holder, then the
Company, the Indenture Trustee, and the Holders shall, subject to any binding
determination in such proceeding, be restored to their former positions and
rights under this Indenture with
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respect to the Trust Indenture Estate, and all rights, remedies and powers of
the Indenture Trustee and the Holders shall continue as if no such proceeding
had been instituted.
Section 7.08. Unconditional Right of Holders to Payments on Equipment
Notes. Notwithstanding any other provision in this Indenture and any provision
of any Certificate, the right of any Holder to receive payment of the principal
of and interest and Make-Whole Premium, if any, on such Equipment Note on or
after the respective due dates and in the manner expressed in such Certificate,
or, subject to Section 7.08 hereof, to institute suit for the enforcement of any
such payment on or after such respective dates as provided herein, shall not be
impaired or affected without the consent of such Holder.
Section 7.09. Control by Holders. The Majority in Interest of Holders
shall have the right to direct the Indenture Trustee as to the time, method, and
place of conducting any proceeding for any remedy available to the Indenture
Trustee under this Indenture, or exercising any trust or power conferred on the
Indenture Trustee by this Indenture; provided that such direction shall not be
otherwise than in accordance with law and the provisions of this Indenture and
the Indenture Trustee shall have received, to the extent provided in Sections
7.06 and 9.03 and Article XI hereof, such reasonable indemnification as it may
require against the costs, expenses and liabilities to be incurred by the
Indenture Trustee; and provided further that (subject to the provisions of
Section 9.02 hereof) the Indenture Trustee shall have the right to decline to
follow any such direction if the Indenture Trustee, being advised by counsel,
shall determine that the action or proceeding so directed may not lawfully be
taken or if the Indenture Trustee in good faith by its board of directors, the
executive committee, or a trust committee of directors or Responsible Officers
of the Indenture Trustee shall determine that the action or proceedings so
directed would involve the Indenture Trustee in personal liability or if the
Indenture Trustee in good faith shall so determine that the actions or
forbearance specified in or pursuant to such direction shall be unduly
prejudicial to the interests of Holders not joining in the giving of said
direction, it being understood that (subject to Section 9.02 hereof) the
Indenture Trustee shall have no duty to ascertain whether or not such actions or
forbearance are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Indenture Trustee
in its discretion to take any action deemed proper by the Indenture Trustee and
which is not inconsistent with the direction by the Majority in Interest of
Holders.
Section 7.10. Waiver of Past Indenture Default. Upon written instructions
from the Majority in Interest of Holders, the Indenture Trustee shall waive any
past Indenture Default and its consequences and upon any such waiver such
Indenture Default shall cease to exist and any Indenture Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture, but no such waiver shall extend to any subsequent or other Indenture
Default or impair any right consequent thereon; provided, however, that in the
absence of written instructions from
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all Holders and each Liquidity Provider, the Indenture Trustee shall not waive
any Indenture Default (a) in the payment of the principal of or Make-Whole
Premium, if any, or interest on, or other amounts due under, any Equipment Note
then Outstanding, or (b) in respect of a covenant or provision of this Indenture
which, under Article XIII hereof, cannot be modified or amended without the
consent of each Holder.
Section 7.11. Notice of Indenture Default. The Indenture Trustee shall
transmit to the Company, the Holders and the Liquidity Provider notice of any
Indenture Event of Default actually known to a Responsible Officer of the
Indenture Trustee or any Indenture Event of Default or Indenture Default arising
out of Section 7.01(i), such notice to be transmitted by mail to the Holders,
the Liquidity Provider and the Company promptly after the occurrence thereof,
unless any such Indenture Default or Indenture Event of Default shall have been
cured before the giving of such notice; except in the case of default in the
payment of the principal of or interest on or any other amount due under any of
the Equipment Notes, the Indenture Trustee shall be protected in withholding
such notice to the Holders if and so long as the board of directors, the
executive committee, or a trust committee of directors or trustees and/or
Responsible Officers of the Indenture Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders.
ARTICLE VIII
[RESERVED]
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
Section 9.01. Acceptance of Trusts. The Indenture Trustee in its
individual capacity hereby accepts the trusts imposed upon it by this Indenture,
and covenants and agrees to perform the same as expressed herein and agrees to
receive and disburse all moneys constituting part of the Collateral in
accordance with the terms hereof.
Section 9.02. Duties Before, and During, Existence of Indenture Event of
Default. (a) The Indenture Trustee, prior to the occurrence of an Indenture
Event of Default and after the curing or waiving of all Indenture Events of
Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. So long as an Indenture
Event of Default has occurred and has not been cured or waived, the Indenture
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs. No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action,
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its own negligent failure to act (or any simple negligence in the handling of
funds) or its own willful misconduct, except that:
(i) prior to the occurrence of an Indenture Event of Default and after the
curing or waiving of all Indenture Events of Default which may have occurred:
(x) the duties and obligations of the Indenture Trustee shall
be determined solely by the express provisions of this Indenture, and the
Indenture Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read in to this Indenture
against the Indenture Trustee; and
(y) in the absence of bad faith on the part of the Indenture
Trustee, the Indenture Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
any statements, certificates or opinions furnished to the Indenture
Trustee and conforming to the requirements of this Indenture; but in the
case of any such statements, certificate or opinions which by any
provision hereof are specifically required to be furnished to the
Indenture Trustee, the Indenture Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements of
this Indenture;
(ii) the Indenture Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers of the
Indenture Trustee, unless it shall be proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to any action
taken or not taken by it in good faith in accordance with the direction of the
Holders of not less than a majority in aggregate principal amount of Outstanding
Equipment Notes relating to the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustee, or exercising any
trust or power conferred upon the Indenture Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Indenture Trustee shall have determined
in good faith that the repayment of such funds or adequate indemnity against
such liability is not reasonably assured to it.
The Indenture Trustee agrees that it will execute and the Company agrees
that it will, at its own expense, file or cause to be filed such continuation
statements with respect to financing statements relating to the security
interest created hereunder in the Collateral as may be specified from time to
time in written instructions of the Holders of not less than 25% in aggregate
principal amount of Equipment Notes (which instructions may, by their terms, be
operative only at a future date and which shall be accompanied by the execution
form of such continuation statement so to be filed);
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provided that, notwithstanding the foregoing, the Indenture Trustee may execute
and file or cause to be filed any financing statement which it from time to time
deems appropriate.
(b) [Reserved]
(c) The Indenture Trustee agrees that it will, in its individual capacity
and at its own cost and expense (but without any right of indemnity in respect
of any such cost or expense under Article XI hereof or under any other Operative
Agreement) promptly take such action as may be necessary duly to discharge all
Indenture Trustee's Liens on any part of the Trust Indenture Estate.
(d) [Reserved]
(e) The Indenture Trustee will furnish to each Holder promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and other instruments furnished to
the Indenture Trustee, to the extent that the same shall not have been otherwise
furnished to such Holder pursuant to this Indenture or to the extent the
Indenture Trustee does not reasonably believe that the same shall have been
furnished by the Company directly to such Holder.
Section 9.03. Certain Rights of the Indenture Trustee. Subject to Section
9.02 hereof:
(a) the Indenture Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, note, coupon, security or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officer's Certificate (unless other
evidence in respect thereof be herein specifically prescribed) upon which the
Indenture Trustee may rely to prove or establish a matter set forth therein;
(c) the Indenture Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(d) the Indenture Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Indenture Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred therein or thereby;
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(e) the Indenture Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Indenture Event of Default hereunder and
after the curing or waiving of all Indenture Events of Default, the Indenture
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, appraisal, bond, debenture, note,
coupon, security, or other paper or document unless requested in writing to do
so by the Majority in Interest of Holders; provided that, if the payment within
a reasonable time to the Indenture Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Indenture, the
Indenture Trustee may require reasonable indemnity against such costs, expenses
or liabilities as a condition to proceeding; the reasonable expenses of every
such examination shall be paid by the Company or, if paid by the Indenture
Trustee or any predecessor trustee, shall be repaid by the Company upon demand;
and
(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys not regularly in its employ and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care by it hereunder.
Section 9.04. Indenture Trustee Not Responsible for Recitals, Equipment
Notes, or Proceeds. The Indenture Trustee assumes no responsibility for the
correctness of the recitals contained herein and in the Equipment Notes, except
the Indenture Trustee's certificates of authentication. The Indenture Trustee
makes no representation as to the validity or sufficiency of this Indenture or
of the Equipment Notes. The Indenture Trustee shall not be accountable for the
use or application by the Company of any of the Equipment Notes or of the
proceeds thereof.
Section 9.05. Indenture Trustee and Agents May Hold Equipment Notes;
Collections, etc. The Indenture Trustee or any agent of the Indenture Trustee in
its individual or any other capacity may become the owner or pledgee of
Equipment Notes with the same rights it would have if it were not the Indenture
Trustee or such agent and may otherwise deal with the Company and receive,
collect, hold and retain collections from the Company with the same rights it
would have if it were not the Indenture Trustee or such agent.
Section 9.06. Moneys Held by Indenture Trustee. Subject to Sections 5.08
hereof and 14.04 hereof, all moneys received by the Indenture Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated from other funds except to
the extent required by mandatory provisions of law. Neither the Company nor,
subject to Section 5.08 hereof,
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the Indenture Trustee nor any agent thereof shall be under any liability for
interest on any moneys received by it hereunder.
Section 9.07. Right of Indenture Trustee to Rely on Officer's Certificate,
etc. Subject to Sections 9.02 and 9.03 hereof, whenever in the administration of
the trusts of this Indenture the Indenture Trustee shall deem it necessary or
desirable that a matter be proved or established prior to taking or suffering or
omitting any action hereunder, such matter (unless other evidence in respect
thereof be specifically prescribed herein) may, in the absence of bad faith on
the part of the Indenture Trustee, be deemed to be conclusively proved and
established by an Officer's Equipment Note delivered to the Indenture Trustee,
and such certificate, in the absence of bad faith on the part of the Indenture
Trustee, shall be full warrant to the Indenture Trustee for any action taken,
suffered or omitted by it under the provisions of this Indenture upon the faith
thereof.
Section 9.08. Replacement Airframes and Replacement Engines. At any time
and from time to time any Airframe or Engine may, or is required to, be replaced
under Section 4.04(a) or 4.03(e) hereof by a Replacement Airframe or Replacement
Engine, as the case may be, shall be replaced in accordance with the provisions
of this Section 9.08 and the provisions of such preceding Sections hereof, the
Company shall, from time to time, direct the Indenture Trustee to execute and
deliver to or as directed in writing by the Company an appropriate instrument
releasing such Airframe and/or Engine as appropriate from the Lien of this
Indenture and the Indenture Trustee shall execute and deliver such instrument as
aforesaid without recourse or warranty, but only upon receipt by or deposit with
the Indenture Trustee of the following:
(1) A written request from the Company requesting such release and
specifically describing the Airframe and/or Engine(s) to be so released.
(2) A certificate signed by a duly authorized officer of the Company
stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe subject to the Event of Loss
including the manufacturer, model, FAA registration number (or other
applicable registration information) and manufacturer's serial number;
(ii) a description of the Replacement Airframe, including the
manufacturer, model, FAA registration number (or other applicable
registration information) and manufacturer's serial number;
(iii) that on the date of the supplement to this Indenture
relating to the Replacement Airframe the Company will be the legal owner
of and have good title to such Replacement Airframe free and clear of all
Liens except Permitted Liens that such Replacement Airframe will on such
date be in at least
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as good operating condition and repair as required by the terms of this
Indenture, and that such Replacement Airframe has been or, substantially
concurrently with such replacement, will be duly registered in the name of
the Company under the Transportation Code or under the law then applicable
to the registration of the Airframe subject to the Event of Loss and that
an airworthiness certificate has been duly issued under the Transportation
Code (or such other applicable law) with respect to such Replacement
Airframe and that such registration and certificate is, or will be, in
full force and effect, and that the Company will have the full right and
authority to use such Replacement Airframe;
(iv) that the insurance required by Section 4.05 hereof is in
full force and effect with respect to such Replacement Airframe;
(v) that the Replacement Airframe is of the same or an
improved make or model as the Airframe requested to be released from this
Indenture;
(vi) that the value of the Replacement Airframe as of the date
of such certificate is not less than the value of the Airframe requested
to be released (assuming such Airframe was in the condition and repair
required to be maintained under this Indenture);
(vii) that no Indenture Event of Default exists or would
result from the making and granting of the request for release and the
addition of a Replacement Airframe;
(viii) that the release of the Airframe subject to the Event
of Loss will not impair the security of the Indenture in contravention of
any of the provisions of this Indenture; and
(ix) that upon such replacement, the Lien of this Indenture
will apply to the Replacement Airframe and such Lien will be a first
priority security interest in favor of the Indenture Trustee.
B. With respect to the replacement of any Engine:
(i) a description of the Engine subject to the Event of Loss
including the manufacturer's serial number;
(ii) a description of the Replacement Engine including the
manufacturer's name, the engine model and serial number;
(iii) that on the date of the supplement to this Indenture
relating to the Replacement Engine the Company will be the legal owner of
such Replacement Engine free and clear of all Liens except Permitted
Liens, and that such Replacement Engine will on such date be in at least
as good operating condition
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and repair as required by the terms of the Indenture and will otherwise
conform to the requirements set forth in the definition of "Replacement
Engine";
(iv) that the value of the Replacement Engine as of the date
of such certificate is not less than the value of the Engine to be
released (without regard to the number of hours or cycles remaining until
the next scheduled maintenance visit, and assuming such Engine was in the
condition and repair required to be maintained under the Indenture);
(v) that the release of the Engine subject to the Event of
Loss will not impair the security of the Indenture in contravention of any
of the provisions of this Indenture;
(vi) that upon such replacement, the Lien of this Indenture
will apply to the Replacement Engine and such Lien will be a first
priority security interest in favor of the Indenture Trustee; and
(vii) that each of the conditions specified in Section 4.03(e)
of this Indenture with respect to such Replacement Engine has been
satisfied.
(3) The appropriate instruments subjecting such Replacement Airframe or
Replacement Engine to the Trust Agreement and to the Lien of this Indenture.
(4) A certificate from a firm of independent aircraft appraisers of
national standing reasonably satisfactory to the Indenture Trustee and the
Company confirming the accuracy of the information set forth in clause (2)A(vi)
of this Section 9.08.
(5) The opinions of counsel to the Company (which may be Company's General
Counsel), or (with respect to those matters set forth in clause (ii) below
relating to the filing of documents pursuant to the Transportation Code) of the
Company's special aviation counsel, or (in either case) other counsel reasonably
satisfactory to the Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property which have been or are therewith delivered to and deposited with
the Indenture Trustee conform to the requirements of this Indenture and
the Lease and, upon the basis of such application, the property so sold or
disposed of may be properly released from the Lien of this Indenture and
all conditions precedent herein provided for relating to such release have
been complied with; and
(ii) the Replacement Airframe or Replacement Engine has been
validly subjected to the Lien of this Indenture, the instruments
subjecting such Replacement Airframe or Replacement Engine to the Lien of
this Indenture, have been duly filed for recordation pursuant to the
Transportation Code or any other law then applicable to the registration
of the Aircraft, and no further action, filing or recording of any
document is necessary or advisable in order to
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establish and perfect the Lien of this Indenture on such Replacement
Airframe or Replacement Engine and, with respect to a Replacement
Airframe, the Indenture Trustee would be entitled to the benefits of
Section 1110 of the Bankruptcy Code with respect to such Replacement
Airframe, provided, that such opinion need not be to the effect specified
in the foregoing clause to the extent that the benefits of such Section
1110 would not have been, by reason of a change in law or governmental
interpretation thereof after the date hereof, available to the Indenture
Trustee with respect to the Aircraft immediately prior to such
substitution had such Event of Loss not occurred.
Section 9.09. Indenture Supplement for Replacements. In the event of the
substitution of a Replacement Airframe or a Replacement Engine as contemplated
by Section 4.04(a) or 4.03(e) hereof, as the case may be, the Company and the
Indenture Trustee agree for the benefit of the Holders, subject to fulfillment
of the conditions precedent and compliance by the Company with its obligations
set forth in Section 4.04(a) or 4.03(e) hereof, as the case may be, to execute
and deliver a supplement to this Indenture as contemplated by Section 9.08(3)
hereof and, provided no Indenture Event of Default shall have occurred and be
continuing, execute and deliver to the Company an appropriate instrument
releasing the Airframe or Engine being replaced from the Lien of this Indenture.
Section 9.10. Effect of Replacement. In the event of the substitution of a
Replacement Airframe or a Replacement Engine as contemplated by Section 4.04(a)
or 4.03(e) hereof as the case may be, and Section 9.08 hereof, all provisions of
this Indenture relating to the Airframe or Engine or Engines being replaced
shall be applicable to such Replacement Airframe or Replacement Engine or
Engines with the same force and effect as if such Replacement Airframe or
Replacement Engine or Engines were the same Airframe or engine or engines, as
the case may be, as the Airframe or Engine or Engines being replaced but for any
Event of Loss with respect to the Airframe or Engine or Engines being replaced.
Section 9.11. Compensation. The Company covenants and agrees to pay, and
the Indenture Trustee shall be entitled to receive, reasonable compensation and
payment or reimbursement for its reasonable advances, expenses and disbursements
(including the reasonable compensation and expenses and disbursements of its
counsel, agents and other persons not regularly in its employ) in connection
with its services rendered hereunder or in any way relating to or arising out of
the administration of the Collateral and shall have a priority claim on the
Collateral for the payment of such compensation, advances, expenses and
disbursements to the extent that such compensation, advances, expenses and
disbursements shall not be paid by the Company, and shall have the right to use
or apply any moneys held by it hereunder in the Collateral toward such payments.
The Indenture Trustee agrees that it shall have no right against any Holder for
any fee as compensation for its services as trustee under this Indenture.
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ARTICLE X
CONCERNING THE HOLDERS
Section 10.01. Evidence of Action Taken by Holders. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by an agent duly appointed in writing, and, except
as otherwise expressly provided herein, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee and, if
expressly required herein, to the Company. Proof of execution of any instrument
or of a writing appointing any such agent shall be sufficient for any purpose of
this Indenture and (subject to Sections 9.02 and 9.03 hereof) conclusive in
favor of the Indenture Trustee and the Company, if made in the manner provided
in this Article.
(b) For the purpose of determining the Holders entitled to vote or consent
to any direction, waiver or other action of such Holders under Section 7.10 or
7.11 hereof, the Company may set a record date for such vote or consent by
specifying such record date in an Officer's Certificate delivered to the
Indenture Trustee. Such record date shall be a date not more than 15 days prior
to the first solicitation of such vote or consent.
Section 10.02. Proof of Execution of Instruments and of Holding of
Equipment Notes. Subject to Sections 9.02 and 9.03 hereof, the execution of any
instrument by a Holder or his agent or proxy may be proved in accordance with
such reasonable rules and regulations as may be prescribed by the Indenture
Trustee. The holding of Equipment Notes shall be proved by the Register or by a
certificate of the Registrar.
Section 10.03. Holders to Be Treated as Owners. Prior to due presentment
for registration of transfer of any Equipment Note, the Company, the Indenture
Trustee, any agent of the Indenture Trustee, the Paying Agent, if any and the
Registrar shall deem and treat the Person in whose name such Equipment shall be
registered upon the Register as the absolute owner of such Equipment Note
(whether or not such Equipment Note shall be overdue and notwithstanding any
notation of ownership or other writing thereon) for the purpose of receiving
payment of or on account of the principal of and, subject to the provisions of
this Indenture, interest on such Equipment Note and for all other purposes; and
neither the Company nor the Indenture Trustee (nor any agent of the Indenture
Trustee) nor the Paying Agent, if any, nor the Registrar shall be affected by
any notice to the contrary. All such payments so made to any such person, or
upon his order, shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Equipment Note.
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Section 10.04. Equipment Notes Owned by Company Deemed Not Outstanding. In
determining whether the Holders of the requisite aggregate principal amount of
Equipment Notes have concurred in any direction, consent or waiver under this
Indenture, Equipment Notes which are owned by the Company, or any Affiliate
thereof shall be disregarded and deemed not to be Outstanding for the purpose of
any such determination; provided that for the purpose of determining whether the
Indenture Trustee shall be protected in relying on any such direction, consent
or waiver, only if a Responsible Officer of the Indenture Trustee has actual
knowledge that certain Equipment Notes are so owned by any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company, shall such Equipment Notes be so disregarded; and
provided further that if all Equipment Notes which would be deemed Outstanding
in the absence of the foregoing provision are owned by the Company, or by any
Affiliate thereof, then such Equipment Notes shall be deemed Outstanding for the
purpose of any such determination. Equipment Notes so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Indenture Trustee the pledgee's right so to act with
respect to such Equipment Notes and that the pledgee is not the Company, or any
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company. In case of a dispute as to such right,
the advice of counsel shall be full protection in respect of any decision made
by the Indenture Trustee in accordance with such advice, unless the Company is
actually named in the Register. Upon request of the Indenture Trustee, the
Company shall furnish to the Indenture Trustee promptly an Officer's Certificate
listing and identifying all Equipment Notes, if any, known by the Company, to be
owned or held by or for any of the above-described persons; and, subject to
Sections 9.02 and 9.03 hereof, the Indenture Trustee shall be entitled to accept
such Officer's Certificate as conclusive evidence of the facts set forth therein
and of the fact that all Equipment Notes not listed therein are outstanding for
the purpose of any such determination.
Section 10.05. ERISA. Any Person, other than the Subordination Agent and
any Pass-Through Trustee who is acquiring the Equipment Notes will be deemed to
represent and warrant that (i) no assets of an employee benefit plan subject to
Title I of ERISA or an individual retirement account or plan subject to Section
4975 of the Code, or any trust established under any such plan or account, have
been used to acquire or hold any of the Equipment Notes, or (ii) that one or
more administrative or statutory exemptions from the prohibited transaction
rules under Section 406 of ERISA and Section 4975 of the Code applies to its
purchase and holding of the Equipment Notes such that its purchase and holding
of the Equipment Notes will not result in a non-exempt prohibited transaction
under Section 406 of ERISA and Section 4975 of the Code.
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ARTICLE XI
[RESERVED]
ARTICLE XII
SUCCESSOR TRUSTEES
Section 12.01. [Reserved].
Section 12.02. Resignation and Removal of Indenture Trustee: Appointment
of Successor. (a) The Indenture Trustee or any successor thereto may resign at
any time without cause by giving at least 30 days' prior written notice to the
Company and each Holder, such resignation to be effective upon the acceptance of
the trusteeship by a successor Indenture Trustee. In addition, the Company or
the Majority in Interest of the Holders may at any time remove the Indenture
Trustee without cause by an instrument in writing delivered to the Indenture
Trustee, and the Indenture Trustee shall promptly notify each Holder thereof of
such action in writing, such removal to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In the case of the resignation or
removal of the Indenture Trustee, the Majority in Interest of the Certificate
Holders (based on the recommendation of the Company), may appoint a successor
Indenture Trustee by an instrument signed by such Holders. If a successor
Indenture Trustee shall not have been appointed within 30 days after such notice
of resignation or removal, the Indenture Trustee, the Company or any Holder may
apply to any court of competent jurisdiction to appoint a successor Indenture
Trustee to act until such time, if any, as a successor shall have been appointed
as provided above. The successor Indenture Trustee so appointed by such court
shall immediately and without further act be superseded by any successor
Indenture Trustee appointed as provided above.
(b) In case at any time any of the following shall occur:
(i) the Indenture Trustee shall cease to be eligible in
accordance with the provisions of Section 12.03 hereof and shall fail to
resign after written request therefor by the Company or by any Holder; or
(ii) the Indenture Trustee shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator
of the Indenture Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Indenture Trustee or of
its property or affairs for the purpose of rehabilitation, conservation or
liquidation;
then the Company may remove the Indenture Trustee and appoint a successor
trustee by written instrument, in duplicate, executed by a Responsible Officer
of the Company, one copy of which instrument shall be delivered to the Indenture
Trustee so removed
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and one copy to the successor trustee, or, subject to the provisions of Section
7.13 hereof, any Holder who has been a bona fide Holder for at least six months
may, on behalf of himself and all others similarly situated Holders, petition
any court of competent jurisdiction for the removal of the Indenture Trustee and
the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the Indenture
Trustee and appoint a successor trustee, which removal and appointment shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 12.04 hereof. The successor Indenture Trustee so appointed
by such court shall immediately and without further act be superseded by any
successor Indenture Trustee appointed as provided above within one year from the
date of appointment by such court.
Section 12.03. Persons Eligible for Appointment as Indenture Trustee.
There shall at all times be an Indenture Trustee hereunder which shall be (i)(x)
a bank or trust company organized and doing business under the laws of the
United States of America or any state or the District of Columbia having a
combined capital and surplus of at least $100,000,000 or (y) a bank or trust
company whose obligations hereunder are fully guaranteed by a direct or indirect
parent thereof having a combined capital and surplus of at least $100,000,000
and (ii) a Person authorized under applicable law to exercise corporate trust
powers and subject to supervision of examination by Federal, state or District
of Columbia authority. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. In case at any time the Indenture Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Indenture
Trustee shall resign immediately in the manner and with the effect specified in
Section 12.02 hereof.
Section 12.04. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 12.02 hereof shall execute
and deliver to the Company and to its predecessor trustee an instrument
accepting such appointment hereunder, in form and substance reasonably
satisfactory to the Company, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Company or of the successor trustee, upon payment of its charges then
unpaid, the trustee ceasing to act shall, subject to Section 14.04 hereof, pay
over to the successor trustee all moneys at the time held by it hereunder and
shall execute and deliver an instrument transferring to such successor trustee
all such rights, powers, duties and obligations. Upon request of any such
successor trustee, the Company shall execute any and all instruments in writing
for more fully and certainly vesting in and confirming to such successor trustee
all such rights and powers. Any trustee ceasing to act shall, nevertheless,
retain a prior claim upon all property or funds
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held or collected by such trustee to secure any amounts then due it pursuant to
the provisions of Article XI hereof.
No successor trustee shall accept appointment as provided in this Section
12.04 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 12.03 hereof.
Upon acceptance of appointment by a successor trustee as provided in this
Section 12.04, the successor trustee shall mail notice thereof by first-class
mail to the Holders at their last addresses as they shall appear in the
Register, and shall mail a copy of such notice to the Company. If the acceptance
of appointment is substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined with the notice
called for by Section 12.02 hereof.
Section 12.05. Merger, Consolidation or Succession to Business of
Indenture Trustee. Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation succeeding to the corporate trust
business of the Indenture Trustee, shall be the successor to the Indenture
Trustee hereunder, provided that, anything herein to the contrary
notwithstanding, such corporation shall be eligible under the provisions of
Section 12.03 hereof, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
In case at the time such successor to the Indenture Trustee shall succeed
to the trusts created by this Indenture any of the Equipment Notes shall have
been authenticated but not delivered, any such successor to the Indenture
Trustee may adopt the certificate of authentication of any predecessor Indenture
Trustee and deliver such Equipment Notes so authenticated; and, in case at that
time any of the Equipment Notes shall not have been authenticated, any successor
to the Indenture Trustee may authenticate such Equipment Notes either in the
name of any predecessor hereunder or in the name of the successor Indenture
Trustee; and in all such cases such certificate shall have the full force which
it is anywhere in the Equipment Notes or in this Indenture provided that the
certificate of the Indenture Trustee shall have; provided, that the right to
adopt the certificate of authentication of any predecessor Indenture Trustee or
to authenticate Equipment Notes in the name of any predecessor Indenture Trustee
shall apply only to its successor or successors by merger, conversion or
consolidation.
Section 12.06. Appointment of Separate Trustees. (a) At any time or times,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Collateral may at the time be located or in which any action of
the Indenture Trustee may be required to be performed or taken, the Indenture
Trustee, by an instrument in writing signed by it, may appoint one or more
individuals or corporations to act as a separate trustee or separate trustees or
co-trustee, acting jointly with the Indenture Trustee, of all or any part of the
Collateral, to the full extent that local law
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makes it necessary for such separate trustee or separate trustees or co-trustee
acting jointly with the Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture Trustee,
the Company, shall execute, acknowledge and deliver all such instruments as may
be required by the legal requirements of any jurisdiction or by any such
separate trustee or separate trustees or co-trustee for the purpose of more
fully confirming such title, rights or duties to such separate trustee or
separate trustees or co-trustee. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee, it,
he or they shall be vested with such title to the Trust Indenture Estate or any
part thereof, and with such rights, powers, duties and obligations, as shall be
specified in the instrument of appointment, and such rights, powers, duties and
obligations shall be conferred or imposed upon and exercised or performed by the
Indenture Trustee, or the Indenture Trustee and such separate trustee or
separate trustees or co-trustee jointly with the Indenture Trustee subject to
all the terms of this Indenture, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the
Indenture Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations shall be
exercised and performed by such separate trustee or separate trustees or
co-trustee, as the case may be. Any separate trustee or separate trustees or
co-trustee may, at any time by an instrument in writing, constitute the
Indenture Trustee its or his attorney-in-fact and agent with full power and
authority to do all acts and things and to exercise all discretion on its or his
behalf and in its or his name. In case any such separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, the title to the
Trust Indenture Estate and all assets, property, rights, powers, duties and
obligations and duties of such separate trustee or co-trustee shall, so far as
permitted by law, vest in and be exercised by the Indenture Trustee, without the
appointment of a successor to such separate trustee or co-trustee unless and
until a successor is appointed.
(c) All provisions of this Indenture which are for the benefit of the
Indenture Trustee (including without limitation Article XI hereof) shall extend
to and apply to each separate trustee or co-trustee appointed pursuant to the
foregoing provisions of this Section 12.06.
(d) Every additional trustee and separate trustee hereunder shall, to the
extent permitted by law, be appointed and act and the Indenture Trustee shall
act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon
the Indenture Trustee in respect of the receipt, custody, investment and
payment of moneys shall be exercised solely by the Indenture Trustee;
(ii) all other rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be conferred or
imposed and exercised or performed by the Indenture Trustee and such
additional trustee or trustees
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and separate trustee or trustees jointly except to the extent that under
any law of any jurisdiction in which any particular act or acts are to be
performed, the Indenture Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Collateral in any such
jurisdiction) shall be exercised and performed by such additional trustee
or trustees or separate trustee or trustees;
(iii) no power hereby given to, or exercisable by, any such
additional trustee or separate trustee shall be exercised hereunder by
such additional trustee or separate trustee except jointly with, or with
the consent of, the Indenture Trustee; and
(iv) no trustee hereunder shall be liable either personally or
in its capacity as such trustee, by reason of any act or omission of any
other trustee hereunder.
If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the Indenture Trustee
to any additional trustee or separate trustee shall be sufficient warrant to
such additional trustee or separate trustee, as the case may be, to take such
action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 12.06, the powers
of any additional trustee or separate trustee shall not exceed those of the
Indenture Trustee hereunder.
ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
Section 13.01. Supplemental Indentures Without Consent of Holders. The
Company and the Indenture Trustee, without consent of the Holders, may enter
into an indenture or indentures supplemental hereto for one or more of the
following purposes:
(a) to convey, transfer, assign, mortgage or pledge any property or assets
to the Indenture Trustee as security for the Equipment Notes;
(b) to evidence the succession of another corporation to the Company or
successive successions, and the assumption by the successor corporation of the
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covenants, agreements and obligations of the Company herein and in the Equipment
Notes;
(c) to add to the covenants of the Company such further covenants,
restrictions, conditions or provisions as it and the Indenture Trustee shall
consider to be for the protection of the Holders, and to make the occurrence, or
the occurrence and continuance, of a default in any such additional covenants,
restrictions, conditions or provisions an Indenture Event of Default permitting
the enforcement of all or any of the several remedies provided herein; provided,
that in respect of any such additional covenant, restriction, condition or
provision such supplemental indenture may provide for a particular period of
grace after default (which period may be shorter or longer than that allowed in
the case of other defaults) or may provide for an immediate enforcement upon
such an Indenture Event of Default or may limit the remedies available to the
Indenture Trustee upon such an Indenture Event of Default or may limit the right
of not less than the Majority in Interest of Holders to waive such an Indenture
Event of Default;
(d) to surrender any right or power conferred herein upon the Company;
(e) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture; or to make such other provisions in regard to matters or questions
arising under this Indenture or under any supplemental indenture as the Company
may deem necessary or desirable and which shall not adversely affect the
interests of the Holders;
(f) to correct or amplify the description of any property at any time
subject to the Lien of this Indenture or better to assure, convey and confirm
unto the Indenture Trustee any property subject or required to be subject to the
Lien of this Indenture or to subject any Replacement Airframe or Replacement
Engine to the Lien of this Indenture in accordance with the provisions hereof or
to release from the Lien of this Indenture property that has been substituted on
or removed from the Aircraft as contemplated in Section 3.07 hereof; provided
that supplements to this Indenture entered into for the purpose of subjecting
any Replacement Airframe or Replacement Engine to the Lien of this Indenture
need only be executed by the Company and the Indenture Trustee;
(g) to provide for the issuance under this Indenture of Equipment Notes in
coupon form (including Equipment Notes registrable as to principal only) and to
provide for exchangeability of such Equipment Notes with Equipment Notes issued
hereunder in fully registered form, and to make all appropriate changes for such
purpose;
(h) to effect the re-registration of the Aircraft pursuant to Section
4.02(b) of the Participation Agreement; and
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(i) to add, eliminate or change any provision hereunder so long as such
action shall not adversely affect the interests of the Holders;
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture, to make any further appropriate agreements and
stipulations which may be contained therein and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Indenture Trustee shall not be obligated to enter into any such supplemental
indenture which adversely affects the Indenture Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any such supplemental indenture may be executed without the consent of the
Holders of Outstanding Equipment Notes, notwithstanding any of the provisions of
Section 13.02 hereof.
Section 13.02. Supplemental Indentures With Consent of Holders. With the
consent (evidenced as provided in Article X) of the Majority in Interest of
Holders, the Company and the Indenture Trustee may, from time to time and at any
time, enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying in
any manner the rights of the Holders; provided, however, that, without the
consent of each and every Holder and each Liquidity Provider, no such amendment
of or supplement to this Indenture or any indenture supplemental hereto, or
modification of the terms of, or consent under, any thereof, shall (a) modify
any of the provisions of Section 7.11 hereof or this Section 13.02, (b) reduce
the amount or extend the time of payment of any amount owing or payable under
any Equipment Note or reduce the interest payable on any Equipment Note, or
alter or modify the provisions of Article V hereof with respect to the order of
priorities in which distributions thereunder shall be made as among Holders of
different Series of Equipment Notes or as between the Holder and the Company or
with respect to the amount or time of payment of any such distribution, or alter
or modify the circumstances under which a Make-Whole Premium shall be payable,
or alter the currency in which any amount payable under any Equipment Note is to
be paid, or impair the right of any Holder to commence legal proceedings to
enforce a right to receive payment hereunder, or (c) create or permit the
creation of any Lien on the Trust Indenture Estate or any part thereof prior to
or pari passu with the Lien of this Indenture, except as expressly permitted
herein, or deprive any Holder of the benefit of the Lien of this Indenture on
the Trust Indenture Estate, except as provided in Section 7.02 hereof or in
connection with the exercise of remedies under Article VII. This Section 13.02
shall not apply to any indenture or indentures supplemental hereto permitted by,
and complying with the terms of, Section 13.06 hereof.
Upon the request of the Company and upon the filing with the Indenture
Trustee of evidence of the consent of Holders and other documents, if any,
required by Section 10.01, the Indenture Trustee shall join with the Company in
the execution of
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such supplemental indenture unless such supplemental indenture affects the
Indenture Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Indenture Trustee may in its discretion, but shall
not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance thereof.
Promptly after the execution by the Company and the Indenture Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Indenture Trustee shall mail a notice thereof by first-class mail to the Holders
at their addresses as they shall appear on the registry books of the Registrar,
setting forth in general terms the substance of such supplemental indenture. Any
failure of the Indenture Trustee to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture.
Section 13.03. Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith and the
respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Indenture Trustee, the Company, and the Holders
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
Section 13.04. Documents to Be Given to Indenture Trustee. The Indenture
Trustee, subject to the provisions of Sections 9.02 and 9.03, may receive an
Officer's Certificate and an Opinion of Counsel as conclusive evidence that any
such supplemental indenture complies with the applicable provisions of this
Indenture.
Section 13.05. Notation on Equipment Notes in Respect of Supplemental
Indentures. Equipment Notes authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article may bear a
notation in form approved by the Indenture Trustee as to any matter provided for
by such supplemental indenture. If the Company or the Indenture Trustee shall so
determine, new Equipment Notes so modified as to conform, in the opinion of the
Company and the Indenture Trustee, to any modification of this Indenture
contained in any such supplemental indenture may be prepared by the Company,
authenticated by the Indenture Trustee and delivered in exchange for the
Outstanding Equipment Notes.
Section 13.06. No Request Necessary for Indenture Supplement.
Notwithstanding anything contained in Section 13.02 hereof, no written request
or consent of the Indenture Trustee or any Holder pursuant to Section 13.02
hereof shall be required to enable the Company to enter into any supplement to
this Indenture in
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accordance with the terms and conditions hereof to subject a Replacement
Airframe or Replacement Engine hereto.
Section 13.07. Notices to Liquidity Providers. Any request made to any
Holder for consent to any amendment, supplement or waiver pursuant to Section
7.11, 8.01 or this Article XIII shall be promptly furnished by the Indenture
Trustee to each Liquidity Provider.
ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 14.01. Satisfaction and Discharge of Indenture: Termination of
Indenture. If at any time after (a) the Company shall have paid or caused to be
paid the principal of and interest on all the Equipment Notes outstanding
hereunder, as and when the same shall have become due and payable and provided
that there shall be no Secured Obligations due to the Indenture Indemnitees or
(b) the Company shall have delivered to the Indenture Trustee for cancellation
all Equipment Notes theretofore authenticated (other than any Equipment Notes
which shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.07 hereof), then this Indenture shall
cease to be of further effect, and the Indenture Trustee, on demand of the
Company and at the cost and expense of the Company, shall execute proper
instruments acknowledging such satisfaction of and discharging this Indenture.
The Company agrees to reimburse and indemnify the Indenture Trustee for any
costs or expenses thereafter reasonably and properly incurred and to compensate
the Indenture Trustee for any services thereafter reasonably and properly
rendered by the Indenture Trustee in connection with this Indenture or the
Equipment Notes.
Upon (or at any time after) payment in full to the Indenture Trustee, as
trust funds, of the principal of and interest on and Make-Whole Premium, if any,
and all other amounts due hereunder and under all Equipment Notes, and of any
Secured Obligations owed to the Indenture Indemnitees and provided that there
shall then be no other amounts due to the Indenture Trustee hereunder or under
the Participation Agreement or otherwise secured hereby, the Company shall
direct the Indenture Trustee to execute and deliver to or as directed in writing
by the Company an appropriate instrument releasing the Aircraft from the Lien of
this Indenture and releasing the Indenture Documents from the assignment thereof
hereunder, and the Indenture Trustee shall execute and deliver such instrument
as aforesaid and, at the Company's expense, will execute and deliver such other
instruments or documents as may be reasonably requested by the Company to give
effect to such release; provided, however, that this Indenture and the trusts
created hereby shall terminate earlier and this Indenture shall be of no further
force or effect upon any sale or other final disposition by the Indenture
Trustee of all property forming a part of the Trust Indenture Estate and the
final distribution by the Indenture Trustee of all moneys or
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other property or proceeds constituting part of the Collateral in accordance
with the terms hereof. Except as aforesaid otherwise provided, this Indenture
and the trusts created hereby shall continue in full force and effect in
accordance with the terms hereof.
Section 14.02. Application by Indenture Trustee of Funds Deposited for
Payment of Equipment Notes. Subject to Section 14.04 hereof, all moneys
deposited with the Indenture Trustee pursuant to Section 14.01 hereof shall be
held in trust and applied by it to the prompt payment, either directly or
through any Paying Agent, to the Holders of the particular Equipment Notes for
the payment or prepayment of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal,
interest and Make-Whole Premium, if any, but such money need not be segregated
from other funds except to the extent required by law.
Section 14.03. Repayment of Moneys Held by Paying Agent. Upon the
satisfaction and discharge of this Indenture all moneys then held by any Paying
Agent under the provisions of this Indenture shall, upon demand of the Company,
be repaid to it or paid to the Indenture Trustee and thereupon such Paying Agent
shall be released from all further liability with respect to such moneys.
Section 14.04. Transfer of Unclaimed Money Held by Indenture Trustee and
Paying Agent. Any moneys deposited with or paid to the Indenture Trustee or any
Paying Agent for the payment of the principal of or interest or Make-Whole
Premium on any Equipment Note and not applied but remaining unclaimed for two
years and eleven months after the date upon which such principal, interest or
Make-Whole Premium shall have become due and payable, shall, unless otherwise
required by mandatory provisions of applicable escheat or abandoned or unclaimed
property law, be paid to the Company by the Indenture Trustee or such Paying
Agent and the Holder of such Certificate, as a general unsecured creditor,
shall, unless otherwise required by mandatory provisions of applicable escheat
or abandoned or unclaimed property laws, thereafter look only to the Company for
any payment which such Holder may be entitled to collect, and all liability of
the Indenture Trustee, or any Paying Agent with respect to such moneys shall
thereupon cease.
ARTICLE XV
MISCELLANEOUS
Section 15.01. Capacity in Which Acting. FNBM acts hereunder not in its
individual capacity but solely as trustee except as expressly provided herein
and in the other Operative Agreements.
Section 15.02. No Legal Title to Trust Indenture Estate in Holders. No
Holder shall have legal title to any part of the Collateral. No transfer, by
operation of law or otherwise, of any Equipment Note or other right, title and
interest of any Holder
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in and to the Collateral or hereunder shall operate to terminate this Indenture
or entitle such Holder or any successor or transferee of such Holder to an
accounting or to the transfer to it of legal title to any part of the
Collateral.
Section 15.03. Sale of Collateral by Indenture Trustee is Binding. Any
sale or other conveyance of all or any part of the Collateral by the Indenture
Trustee made pursuant to the terms of this Indenture shall bind the Company and
the Holders and shall be effective to transfer or convey all right, title and
interest of the Indenture Trustee, the Company, and such Holders therein and
thereto. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or conveyance or
as to the application of any sale or other proceeds with respect thereto by the
Indenture Trustee.
Section 15.04. Indenture Trustee, FNBM, Company, Liquidity Providers and
Holders Only. Nothing in this Indenture, whether express or implied, shall be
construed to give to any person other than the Company, FNBM, the Indenture
Trustee, each Liquidity Provider and the Holders any legal or equitable right,
remedy or claim under or in respect of this Indenture. Upon termination of this
Indenture pursuant to Article XIV hereof, the Indenture Trustee in connection
with the satisfaction of the Indenture shall return to the Company all property
(and related documents and instruments) constituting or evidencing the
Collateral.
Section 15.05. No Action Contrary to Company's Rights. Notwithstanding any
of the provisions of this Indenture to the contrary, so long as no Indenture
Event of Default shall have occurred and be continuing, the Indenture Trustee
will not take any action that interferes with the peaceful and quiet possession
and enjoyment of the Aircraft by the Company or any Permitted Lessee.
Section 15.06. Notices. Unless otherwise expressly specified or permitted
by the terms hereof, all notices, requests, demands, authorizations, directions,
consents, waivers or documents provided or permitted by this Indenture to be
made, given, furnished or filed shall be in writing, and shall be given and
become effective in the manner set forth in Section 14.01 of the Participation
Agreement. Any party hereto may change the address to which notices to such
party will be sent by giving notice of such change to the other parties to this
Indenture.
Section 15.07. Officer's Certificates and Opinions of Counsel. Upon any
application or demand by the Company to the Indenture Trustee to take any action
under any of the provisions of this Indenture, the Company shall furnish to the
Indenture Trustee upon request (a) an Officer's Certificate stating that all
conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and that the proposed action is in conformity
with the requirements of this Indenture, and (b) an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, except that in the case of any such application or demand as
to which the furnishing of such
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documents is specifically required by any provision of this Indenture relating
to such particular application or demand, no additional certificate or opinion
need be furnished.
Any certificate, statement or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of
or representations by counsel, unless such officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it relates
to factual matters information with respect to which is in the possession of the
Company upon the certificate, statement or opinion of or representations by an
officer or officers of the Company, unless such counsel knows that the
certificate, statement or opinion or representations with respect to the matters
upon which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous.
Any certificate, statement or opinion of an officer of the Company or of
counsel thereto may be based, insofar as it relates to accounting matters, upon
a certificate or opinion of or representations by an accountant or firm of
accountants employed by the Company, as the case may be, unless such officer or
counsel, as the case may be, knows that the certificate or opinion or
representations with respect to the accounting matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public accountants
filed with the Indenture Trustee shall contain a statement that such firm is
independent.
Section 15.08. Severability. Any provision of this Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 15.09. No Oral Modifications or Continuing Waivers. No terms or
provisions of this Indenture or the Equipment Notes may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party or other person against whom enforcement of the change, waiver,
discharge or termination is sought; and any waiver of the terms hereof or of any
Equipment Note shall be effective only in the specific instance and for the
specific purpose given.
Section 15.10. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
parties hereto and the successors and permitted assigns of each, all as herein
provided. Any
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request, notice, direction, consent, waiver or other instrument or action by any
Holder shall bind the successors and assigns of such Holder.
Section 15.11. Headings. The headings of the various Articles and Sections
herein and in the table of contents hereto are for the convenience of reference
only and shall not define or limit any of the terms or provisions hereof.
Section 15.12. Normal Commercial Relations. Anything contained in this
Indenture to the contrary notwithstanding, the Indenture Trustee and any Holder,
or any bank or other affiliate of any such party, may conduct any banking or
other financial transactions, and have banking or other commercial
relationships, with the Company fully to the same extent as if this Indenture
were not in effect, including without limitation the making of loans or other
extensions of credit to the Company for any purpose whatsoever, whether related
to any of the transactions contemplated hereby or otherwise.
Section 15.13. Governing Law; Counterparts. THIS INDENTURE IS BEING
DELIVERED IN THE STATE OF NEW YORK. THIS INDENTURE AND EACH EQUIPMENT NOTE SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. This Indenture may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture and
Security Agreement to be executed by their respective officers thereunto duly
authorized as of the date first written above.
MIDWAY AIRLINES CORPORATION
By: ________________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF MARYLAND,
as Indenture Trustee
By: ________________________________________
Name:
Title:
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Annex A
Series Principal Amount Interest Rate
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A
B
C
D
[Owned Aircraft
Definitions]
APPENDIX A
DEFINITIONS [N_______]
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (as defined below), unless otherwise
defined in an Operative Agreement or the context thereof shall otherwise
require. In the case of any conflict between the provisions of this Appendix and
the provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean such agreements as amended and supplemented from time to
time, and (ii) references to parties to agreements shall be deemed to include
the successors and permitted assigns of such parties.
"Additional Insureds" means the Indenture Trustee (in its individual and
trust capacities) and each Liquidity Provider.
"Aeronautics Authority" means as of any time of determination, the FAA or
other governmental airworthiness authority having jurisdiction over the Aircraft
or the Airframe and Engines or engines attached thereto under the laws of the
country in which the Airframe is then registered.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling 50% or more of any class of voting securities of such
Person or otherwise controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract or
otherwise.
"After Tax Basis" means a basis such that any payment to be received by a
Person shall be supplemented by a further payment to such Person so that the sum
of the two payments, after deduction of all Taxes (taking into account any
related credits or deductions) resulting from the receipt or accrual of such
payments, shall be equal to the payment to be received.
"Aircraft" means the Airframe together with the Engines, whether or not
any of the Engines may at the time of determination be installed on the Airframe
or installed on any other airframe or on any other aircraft.
"Airframe" means (i) the Canadair Regional Jet Series 200ER aircraft
(excluding the Engines and any other engines which may from time to time be
installed thereon, but including any and all Parts which may from time to time
be incorporated in, installed on or attached to such aircraft, and including any
and all such Parts removed therefrom so long as such removed Parts remain
subject to the Lien of the Indenture) identified by national registration number
and manufacturer's serial number in the Indenture Supplement executed and
delivered on the Delivery Date, so long as a Replacement Airframe shall not have
been substituted therefor pursuant to Section 4.04 of the Indenture, and (ii) a
Replacement Airframe, so long as another Replacement Airframe shall not have
been substituted therefor pursuant to Section 4.04 of the Indenture.
"Applicable Law" means all applicable laws, treaties, judgments, decrees,
injunctions, writs and orders of any court, governmental agency or authority and
rules, regulations, orders, directives, licenses and permits of any governmental
body, instrumentality, agency or authority.
"Average Life Date" means, for any Equipment Note, the date which follows
the prepayment date by a period equal to the Remaining Weighted Average Life of
such Equipment Note.
"Bankruptcy Code" means Title 11 of the United States Code, as amended,
and any successor thereto.
"Business Day" means any day other than a Saturday or Sunday on which
commercial banks are not authorized or required to close in New York City,
Charlotte, North Carolina and the city in the United States in which the office
or agency is maintained by the Pass-Through Trustee for the payment of the
Pass-Through Certificates.
"Citizen of the United States" means a citizen of the United States as
defined in ss. 40102(a)(15) of the Transportation Code, or any analogous part of
any successor or substituted legislation or regulation at the time in effect.
"Class A Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class B Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class C Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
-2-
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any similar legislation of the United States enacted to supersede,
amend, or supplement such Code (and any reference to a provision of the Code
shall refer to any successor provision(s), however designated).
"Commitment" of a Loan Participant shall have the meaning given such term
in Section 2(a) of the Participation Agreement.
"Company" means Midway Airlines Corporation, a Delaware corporation.
"Company Documents" means (x) the Operative Agreements to which the
Company is a party and (y) the Pass-Through Trust Agreements.
"DOT" means the U.S. Department of Transportation or any successor
thereto.
"Debt Rate" means the weighted average (based on Outstanding principal
amount) rate of interest on the Equipment Notes.
"Default" means any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Indenture Event of Default.
"Delivery Date" means the date of the initial Indenture Supplement.
"Deposit Agreement" means each of the four Deposit Agreements between the
Depositary and the Escrow Agent, dated as of the Issuance Date, each of which
relates to one of the Pass-Through Trusts.
"Depositary" means First Union National Bank, as Depositary under each
Deposit Agreement.
"Dollars" means dollars in lawful currency of the United States.
"Downgrade Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Engine" means (A) one of the two CF34-3B1 Series 200 engines identified
by manufacturer's serial number in the Indenture Supplement executed and
delivered on the Delivery Date, so long as a Replacement Engine shall not have
been substituted therefor pursuant to Section 4.03(e) of the Indenture, and (B)
a Replacement Engine, so long as another Replacement Engine shall not have been
substituted therefor pursuant to Section 4.03(e) of the Indenture, whether or
not such engine or Replacement Engine, as the case may be, is from time to time
installed on the Airframe or installed on any other aircraft, and including in
each case all Parts incorporated or installed in or attached thereto and any and
all Parts removed therefrom so long as such Parts remain subject to the Lien of
the Indenture. The term "Engines" means, as of any date of determination, the
two engines each of which is an Engine on that date.
-3-
"Equipment Notes" means the Equipment Notes issued by the Company
pursuant to the Indenture and any equipment note issued in exchange therefor or
replacement thereof pursuant to the Indenture.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means First Union Trust Company, National Association, as
Escrow Agent under each of the Escrow Agreements.
"Escrow Agreement" means each of the four Escrow and Paying Agent
Agreements, among the Escrow Agent, the Paying Agent, certain initial purchasers
of the Pass-Through Certificates named therein and one of the Pass-Through
Trustees, dated as of the Issuance Date, each of which relates to one of the
Pass-Through Trusts.
"Event of Loss" means any of the following events with respect to the
Aircraft, the Airframe or any Engine:
(i) theft or disappearance for a period in excess of 90 consecutive
days;
(ii) destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use for any reason whatsoever;
(iii) any event which results in an insurance settlement with
respect to such property on the basis of an actual, constructive or
compromised total loss;
(iv) condemnation, confiscation or seizure of, or requisition of
title to or use of such property by any foreign government (or in the case
of any such requisition of title, by the Government) or any agency or
instrumentality thereof, for a period in excess of 180 consecutive days
(or 30 consecutive days for the appropriation of title);
(v) condemnation, confiscation or seizure of, or requisition of use
of such property by the Government; and
(vi) as a result of any law, rule, regulation, order or other action
by the Aeronautics Authority, the use of the Aircraft or Airframe in the
normal course of air transportation shall have been prohibited by virtue
of a condition affecting all Canadair Regional Jet Series 200ER aircraft
equipped with engines of the same make and model as the Engines for a
period of 180 consecutive days, unless the Company, prior to the
expiration of such 180-day period, shall be diligently carrying forward
all necessary and desirable steps to permit normal use of the Aircraft and
shall within 12 months have conformed at least one Canadair Regional Jet
Series 200ER aircraft (but not necessarily the Aircraft) to the
requirements of any such law, rule, regulation, order or action, and shall
be diligently pursuing conformance of the Aircraft in a non-discriminatory
manner.
-4-
The date of such Event of Loss shall be (aa) the 91st day following loss of such
property or its use due to theft or disappearance; (bb) the date of any
destruction, damage beyond economic repair or rendition of such property
permanently unfit for normal use; (cc) the date of any insurance settlement on
the basis of an actual, constructive or compromised total loss; (dd) the 181st
day following condemnation, confiscation, seizure or requisition of title to or
use of such property by a foreign government referred to in clause (iv) above
(or the 31st day in the case of appropriation of title; (ee) the 181st day
following requisition of title to or use of such property by the Government; and
(ff) the last day of the applicable period referred to in clause (vi) above. An
Event of Loss with respect to the Aircraft shall be deemed to have occurred if
any Event of Loss occurs with respect to the Airframe.
"Expenses" has the meaning given to such term in Section 7.01(a) of the
Participation Agreement.
"Federal Aviation Administration" or "FAA" means the United States Federal
Aviation Administration and any successor agency or agencies thereto.
"Final Drawing" has the meaning given to such term in Section 1.01 of the
Intercreditor Agreement.
"FNBM" means The First National Bank of Maryland, a national banking
association.
"Government" means the United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
"Holder" means, as of any particular time, the Person in whose name a
Equipment Note shall be registered.
"Indemnitee" means each of the Subordination Agent, in its individual
capacity and in its capacity as Subordination Agent, each Liquidity Provider,
the Indenture Trustee, in its individual capacity and as trustee, the Escrow
Agent, the Paying Agent, the Pass-Through Trustees and each Affiliate, officer,
director, employee, agent and servant of any of the foregoing Persons. No holder
of a Pass-Through Certificate shall be deemed to be an Indemnitee.
"Indenture" means the Trust Indenture and Security Agreement [N_____],
dated as of ______________ __, 199_, between the Company and the Indenture
Trustee.
"Indenture Default" means any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
"Indenture Event of Default" means each of the events specified in Section
7.01 of the Indenture.
-5-
"Indenture Indemnitee" means (i) the Indenture Trustee and each separate
or additional trustee appointed pursuant to the Indenture, (ii) the Escrow
Agent, (iii) the Subordination Agent, (iv) each Liquidity Provider, (v) the
Paying Agent, (vi) each Pass-Through Trustee and (vii) each of the respective
directors, officers, employees, agents and servants of each of the persons
described in clauses (i) through (vi).
"Indenture Supplement" means (a) the Trust Indenture and Security
Agreement Supplement No. 1, substantially in the form of Exhibit A to the
Indenture, which shall describe with particularity the Aircraft covered by the
Indenture, and which creates a first priority security interest in the Aircraft
and (b) any other supplement to the Indenture from time to time executed and
delivered.
"Indenture Trustee" means The First National Bank of Maryland, a national
banking association, as indenture trustee under the Operative Documents.
"Indenture Trustee's Liens" means any Lien against, on or with respect to
the Aircraft, any Engine, or the Trust Indenture Estate or any part thereof
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to the
Indenture or any document included in the Trust Indenture Estate, (ii) any act
or omission of the Indenture Trustee which is not related to the transactions
contemplated by the Operative Agreements or is in violation of any of the terms
of the Operative Agreements, or (iii) Taxes imposed against the Indenture
Trustee in its individual capacity in respect of which the Company has not
indemnified (and is not obligated to indemnify) the Indenture Trustee in such
capacity.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Indenture Trustee that is
independent in fact, does not have any direct financial interests, or any
material indirect financial interest, in the Indenture Trustee or any Affiliate
of the Indenture Trustee, and is not connected with the Indenture Trustee or any
Affiliate of the Indenture Trustee, as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions;
provided, that if the Indenture Trustee shall not have received written notice
of such an appointment at least 10 days prior to the Prepayment Date,
"Independent Investment Banker" shall mean such an institution appointed by the
Indenture Trustee.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
August 13, 1998, among the Pass-Through Trustees, the Class A Liquidity
Provider, the Class B Liquidity Provider, the Class C Liquidity Provider and the
Subordination Agent.
"Interest Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Issuance Date" means August 13, 1998.
-6-
"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
security interest, claim, or other similar interest of any nature whatsoever.
"Liquidity Facility" means each of the three Irrevocable Revolving Credit
Agreements (consisting of a separate Revolving Credit Agreement with the
Liquidity Provider with respect to each Pass-Through Trust) between the
Subordination Agent, as borrower, and the Liquidity Provider, each dated as of
the Issuance Date.
"Liquidity Provider" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Loan Participant" means and includes each registered holder from time to
time of an Equipment Note issued under the Indenture including, so long as it
holds any Equipment Notes issued under the Indenture, the Pass-Through Trustee
under each Pass-Through Trust Agreement.
"Majority in Interest of Holders" means, as of a particular date of
determination, the Holders of more than 50% of the aggregate unpaid principal
amount of all Equipment Notes Outstanding as of such date.
"Make-Whole Premium" means with respect to any Equipment Note, an amount
determined as of the day before the applicable Prepayment Date (or date of
purchase, as the case may be) which an Independent Investment Banker determines
to be equal to the excess, if any, of (i) the present value of the remaining
scheduled payments of such principal amount or portion thereof and interest
thereon to the maturity date of such Equipment Note assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield (in the case of the Series A Equipment Notes and Series B Equipment Notes)
and the Treasury Yield plus .50% (in the case of the Series C Equipment Notes
and the Series D Equipment Notes) over (ii) the outstanding principal amount of
such Equipment Note plus accrued interest (other than any overdue portion
thereof).
"Manufacturer" means Bombardier, Inc., a Canadian corporation.
"Minimum Liability Amount" has the meaning given to such term in Exhibit B
to the Participation Agreement.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Note Purchase Agreement" means the Note Purchase Agreement, dated as of
the Issuance Date, among the Company, the Subordination Agent, the Escrow Agent,
the Paying Agent and the Pass-Through Trustee under each Pass-Through Trust
Agreement providing for, among other things, the issuance and sale of certain
equipment notes.
-7-
"Offering Memo" means the Company's August 6, 1998 Offering Memorandum
concerning the Pass-Through Certificates.
"Officer's Certificate" means, when delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Company and delivered to the
Indenture Trustee. Each such certificate shall include the statements provided
for in Section 15.07 of the Indenture.
"Operative Agreements" means the Participation Agreement, the Equipment
Notes outstanding at the time of reference, the Indenture and each Indenture
Supplement.
"Opinion of Counsel" means when delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the Company
may be (i) an attorney employed by the Company who is generally empowered to
deliver such written opinions, (ii) Fulbright & Xxxxxxxx L.L.P., or (iii) other
counsel designated by the Company and reasonably satisfactory to the Indenture
Trustee, and (b) for the Indenture Trustee, an attorney selected by such Person
and reasonably satisfactory to the Company.
"Outstanding" means, when used with respect to Equipment Notes, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Equipment Notes theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Equipment Notes theretofore canceled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Equipment Notes for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee in
trust for the Holders of such Equipment Notes pursuant to Section
14.01 of the Indenture; provided that if such Equipment Notes are to
be prepaid, notice of such prepayment has been duly given pursuant
to the Indenture or provision therefor satisfactory to the Indenture
Trustee has been made; and
(iii) Equipment Notes in exchange for or in lieu of which other
Equipment Notes have been executed and delivered pursuant to Article
II of the Indenture.
"Participants" means, collectively, the Pass-Through Trustee with respect
to each of the Pass-Through Trust Agreements; "Participant" means, individually,
one of the Participants.
-8-
"Participation Agreement" the Participation Agreement [N _____], dated as
of__________ __,199__, among the Company, the Indenture Trustee, the
Pass-Through Trustees and the Subordination Agent.
"Parts" means any and all appliances, parts, instruments, appurtenances,
accessories, furnishings, seats, and other equipment of whatever nature (other
than Engines or engines and temporary replacement parts as provided in Section
4.04 of the Indenture and cargo containers) which may from time to time be
incorporated or installed in or attached to any Airframe or any Engine,
exclusive of any items leased by the Company from third parties and not required
in the navigation of the Aircraft.
"Pass-Through Certificates" means any of the Pass-Through Certificates,
1998-1A, the Pass-Through Certificates, 1998-1B, the Pass-Through Certificates,
1998-1C or the Pass-Through Certificates, 1998-1D, in each case as issued by the
related Pass-Through Trust; and "Pass-Through Certificates" means all of such
Pass-Through Certificates.
"Pass-Through Documents" means the Pass-Through Trust Agreements, the
Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement and
the Liquidity Facilities.
"Pass-Through Trust" means the Midway Airlines 1998-1 Pass-Through Trust
Class A, Midway Airlines 1998-1 Pass-Through Trust Class B, Midway Airlines
1998-1 Pass-Through Trust Class C and Midway Airlines 1998-1 Pass-Through
Trust-Class D, in each case formed pursuant to the related Series Supplement in
accordance with the Pass-Through Trust Agreement; and "Pass-Through Trusts"
means all of such Pass-Through Trusts.
"Pass-Through Trust Agreement" means each of the four Pass-Through Trust
Agreements dated as of August 13, 1998 among the Company and the Pass-Through
Trustee (which shall include each Successor Pass-Through Trust Agreement entered
into pursuant to Section 11.01 of each thereof).
"Pass-Through Trustee" The First National Bank of Maryland, a national
banking association, in its capacity as Pass-Through Trustee under each
Pass-Through Trust Agreement.
"Past Due Rate" means in respect of any principal of or interest on or any
other amounts payable in respect of any Equipment Note that is not paid when due
to any Holder, a rate per annum during the period from and including the due
date to but excluding the date on which such amount is paid in full equal to 1%
plus the interest rate applicable to such Equipment Note.
"Payment Date" means each January 2 and July 2, commencing on _________ 2,
199__.
-9-
"Permitted Air Carrier" means (a) any Section 1110 Person and (b) any
foreign air carrier that is principally based in any foreign country listed on
Exhibit C to the Indenture, except those that do not maintain normal diplomatic
relations with the United States.
"Permitted Investments" means (a) direct obligations of the United States
of America or any agency or instrumentality thereof, (b) obligations fully
guaranteed by the United States of America or any agency or instrumentality
thereof, (c) any mutual fund the portfolio of which is limited to obligations of
the type described in clauses (a) and (b), including any proprietary mutual fund
of The First National Bank of Maryland for which such bank or an affiliate is
investment advisor or to which such bank provides other services and receives
reasonable compensation for such services, (d) certificates of deposit issued
by, or bankers' acceptances of, or time deposits or a deposit account with, any
bank, trust company, or national banking association incorporated or doing
business under the laws of the United States of America or one of the states
thereof, having a combined capital and surplus of at least $100,000,000 and
having a rating of "A" or better from the Xxxxx Bank Watch Service, (e)
commercial paper issued by companies in the United States which directly issue
their own commercial paper and which are doing business under the laws of the
United States of America or one of the states thereof and in each case having a
rating assigned to such commercial paper by a nationally recognized rating
organization in the United States of America equal to the highest rating
assigned by such organization, or (f) obligations of the type described in
clauses (a), (b), (d), or (e) above, purchased from any bank, trust company, or
banking association referred to in clause (d) above pursuant to repurchase
agreements obligating such bank, trust company, or banking association to
repurchase any such obligation not later than 30 days after the purchase of any
such obligation. Unless otherwise specified in writing by the Company, all such
Permitted Investments shall mature not later than 30 days from the date of
purchase.
"Permitted Lien" has the meaning given to such term in Section 4.06 of the
Indenture.
"Permitted Lessee" means (a) any Permitted Air Carrier or (b) any airframe
or engine manufacturer, or Affiliate of such a manufacturer, who is domiciled in
the United States of America or a country listed on Exhibit C to the Indenture.
"Person" means any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
"Placement Agents" means Xxxxxx Xxxxxxx & Co. Incorporated and Credit
Suisse First Boston.
"Placement Agreement" means the Purchase Agreement dated August 6, 1998
among the Company and the Placement Agents.
-10-
"Prepayment Date" has the meaning given to such term in Section 6.02(b) of
the Indenture.
"Prepayment Price" has the meaning given to such term in Section 6.02(b)
of the Indenture.
"Purchase Agreement" means Bombardier Regional Aircraft Division Purchase
Agreement No. PA-0393 dated September 17, 1997, as amended, between the Company
and the Manufacturer (including all exhibits thereto, together with all letter
agreements entered into that by their terms constitute part of any such Purchase
Agreement).
"Rating Agency" means Moody's or S&P, as the context requires.
"Record Date" means, with respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 15 for January 2
Payment Dates and June 15 for July 2 Payment Dates, whether or not such date is
a Business Day.
"Register" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registrar" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registration Rights Agreement" means the Exchange and Registration Rights
Agreement, dated as of August 13, 1998, among the Placement Agents, FNBM, as
Pass-Through Trustee, and the Company.
"Registration Rights Event" has the meaning given to such term in the
Registration Rights Agreement.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and supplemented
and in effect from time to time.
"Remaining Weighted Average Life" means on a given date with respect to
any Equipment Note the number of days equal to the quotient obtained by dividing
(i) the sum of each of the products obtained by multiplying (a) the amount of
each then remaining scheduled payment of principal of such Equipment Note by (b)
the number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Equipment Note.
"Replacement Aircraft" means any Aircraft of which a Replacement Airframe
is part.
"Replacement Airframe" means a Canadair Regional Jet Series 200ER series
aircraft or a comparable or improved model of such aircraft of the Manufacturer
(except
-11-
Engines or engines from time to time installed thereon) which shall have become
subject to the Indenture pursuant to Section 4.04 thereof.
"Replacement Engine" means a CF34-3B1 Series 200 engine (or engine of the
same or another manufacturer of a comparable or an improved model and suitable
for installation and use on the Airframe), and which shall have become subject
to the Indenture pursuant to Section 4.03(e) thereof.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer in its Corporate Trust Administration, as the case may be, designated by
such Person to perform obligations under the Operative Agreements, and with
respect to any other party, any corporate officer of a party who, in the normal
performance of his or her operational responsibilities, with respect to the
subject matter of any covenant, agreement or obligation of such party pursuant
to any Operative Agreement, would have responsibility for and knowledge of such
matter and the requirements of any Operative Agreement with respect thereto.
"S&P" means Standard & Poor's Ratings Group.
"SEC" means the Securities and Exchange Commission of the United States
and any successor agencies or authorities.
"Section 1110 Person" means a Citizen of the United States who is an air
carrier holding a valid air carrier operating certificate issued pursuant to 49
U.S.C. ch. 447 for aircraft capable of carrying 10 or more individuals.
"Secured Obligations" has the meaning specified in the Granting Clause of
the Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Series "A" or "Series A Equipment Notes" means the Equipment Notes issued
and designated as "Series A" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series A".
"Series "B" or "Series B Equipment Notes" means the Equipment Notes issued
and designated as "Series B" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series B".
"Series "C" or "Series C Equipment Notes" means the Equipment Notes issued
and designated as "Series C" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series C".
-12-
"Series "D" or "Series D Equipment Notes" means the Equipment Notes issued
and designated as "Series D" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series D".
"Specified Default" means (a) an event or condition described in Section
7.01(i), (iv), (v) and (vi) of the Indenture that, after the giving of notice or
lapse of time, or both, would mature into an Indenture Event of Default, or (b)
any Indenture Event of Default.
"Specified Investments" means (a) direct obligations of the United States
of America or obligations fully guaranteed by the United States of America; (b)
any mutual fund the portfolio of which is limited to obligations of the type
described in clause (a), including any proprietary mutual fund of The First
National Bank of Maryland for which such bank or an affiliate is investment
advisor or to which such bank provides other services and receives reasonable
compensation for such services; (c) commercial paper rated A-1/P-1 by S&P and
Moody's, respectively or, if such ratings are unavailable, rated by any
nationally recognized rating organization in the United States equal to the
highest rating assigned by such rating organization; (d) investments in
negotiable certificates of deposit, time deposits, banker's acceptances,
commercial paper or other direct obligations of, or obligations guaranteed by,
commercial banks organized under the laws of the United States or of any
political subdivision thereof (or any U.S. branch of a foreign bank) with issuer
ratings of at least B/C by Thomson Bankwatch, having maturities no later than 90
days following the date of such investment; (e) overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers; or (f) overnight repurchase agreements with respect to the
securities described in clause (a) above entered into with an office of a bank
or trust company which is located in the United States of America or any bank or
trust company which is organized under the laws of the United States or any
state thereof and has capital, surplus and undivided profits aggregating at
least $500 million.
"Subordination Agent" means The First National Bank of Maryland, a
national banking association, in its capacity as Subordination Agent.
"Transaction Costs" means those costs and expenses set forth in Section
8.01(a) of the Participation Agreement to be borne by the Company.
"Transportation Code" means Title 49 of the United States Code, subtitle
VII, as amended and in effect on the date of the Indenture or as subsequently
amended, or any successor or substituted legislation at the time in effect and
applicable, and the regulations promulgated pursuant thereto.
"Treasury Yield" means, at the time of determination with respect to any
Equipment Note, the interest rate (expressed as a semi-annual equivalent and as
a decimal and, in the case of United States Treasury bills, converted to a bond
equivalent
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yield) determined to be the per annum rate equal to the semi-annual yield to
maturity for United States Treasury securities maturing on the Average Life Date
on such Equipment Note and trading in the public securities markets either as
determined by interpolation between the most recent weekly average yield to
maturity for two series of United States Treasury securities, trading in public
securities markets, (i) one maturing as close as possible to, but earlier than,
the Average Life Date of such Certificate and (ii) the other maturing as close
as possible to, but later than, the Average Life Date of such Equipment Note, in
each case as published in the most recent H.15(519) or, if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Equipment Note is reported on the most recent H.15(519), such
weekly average yield to maturity as published in such H.15(519). "H.15(519)"
means the weekly statistical release designated as such, or any successor
publication, published by the Board of Governors of the Federal Reserve System.
The date of determination of a Make-Whole Premium will be the third Business Day
prior to the applicable prepayment date and the "most recent H.15(519)" means
the H.15(519) published prior to the close of business on the third Business
Day prior to the applicable prepayment date.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Trust Indenture Estate" means all estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interest, and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments.
"United States", "U.S." or "US" means the United States of America.
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Annex B
Amortization Schedule
Series A Series B Series C Series D
Payment Equipment Equipment Equipment Equipment
Date Notes Notes Notes Notes
---- ----- ----- ----- -----
Exhibit A to
Trust Indenture and
Security Agreement
Indenture Supplement No. __
This Indenture Supplement No. __ dated ____________, 199_, of Midway
Airlines Corporation, a Delaware Corporation.
WITNESSETH:
WHEREAS, the Indenture provides for the execution and delivery of this
Indenture Supplement which shall particularly describe the Aircraft included in
the property covered by the Indenture.
WHEREAS, the Trust Indenture and Security Agreement [N_____] dated as of
__________ (the "Indenture") between the Company and The First National Bank of
Maryland (herein called the "Indenture Trustee") provides for the execution and
delivery of an Indenture Supplement substantially in the form of this Indenture
Supplement No. __, which Supplement shall particularly describe the Aircraft
included in the Collateral, and shall specifically mortgage such Aircraft to the
Indenture Trustee.
WHEREAS, the Indenture relates to the Aircraft and the Engines described
in the following paragraph and a counterpart of the Indenture is attached to and
made a part of this Indenture Supplement No. __, and this Indenture Supplement
No. __, together with such attachment, is being filed for recordation on or
promptly after the date of this Supplement No. __ with the Federal Aviation
Administration as one document.
NOW, THEREFORE, to secure the prompt payment of the principal of and
Make-Whole Premium, if any, and interest on, and all other amounts due with
respect to, all Outstanding Equipment Notes under the Indenture and all other
amounts due hereunder and the performance and observance by the Company of all
the agreements, covenants and provisions for the benefit of the Holders
contained in the Indenture, the Participation Agreement and the Equipment Notes,
and the prompt payment of any and all amounts from time to time owing under the
Participation Agreement by the Company to the Holders and the Indenture
Indemnitees and for the uses and purposes and subject to the terms and
provisions of the Indenture and the Equipment Notes, and in consideration of the
premises and of the covenants contained in the Indenture, and of the purchase of
the Equipment Notes by the Holders, and of the sum of $1 paid to the Company by
the Indenture Trustee at or before the delivery of the Indenture, the receipt of
which is hereby acknowledged, the Company has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged, granted a security interest
in, and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge, grant a security interest in, and confirm, unto the Indenture
Trustee, its successors and assigns, in trust for the equal and ratable security
and benefit of the Holders, in the trust created by the Indenture, and subject
to all of the terms, conditions, provisions and limitations set forth in the
Indenture, a first priority security interest in and mortgage lien on all
estate, right, title and interest of the Company in, to and under the following
described property:
AIRFRAME
One Airframe identified as follows:
FAA Manufacturer's
Registration Serial
Manufacturer Model Number Number
------------ ----- ------ ------
Canadair CL-600-2B19 N___ ____________
together with all appliances, equipment, instruments and accessories (including,
without limitation, radio and radar) from time to time belonging thereto, owned
by the Company and installed in or appurtenant to said aircraft.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated takeoff
horsepower or the equivalent thereof, identified as follows:
Manufacturer's
Serial
Manufacturer Model Number
------------ ----- ------
General Electric CF34-3B1 ______________
______________
together with all equipment and accessories belonging thereto, by whomsoever
manufactured, owned by the Company and installed in or appurtenant to such
aircraft engines.
Together with all substitutions, replacements and renewals of the property
described above, and all property owned by the Company which shall hereafter
become physically attached to or incorporated in the property described above,
whether the same are now owned by the Company or shall hereafter be acquired by
it.
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TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Holders for the uses and purposes and subject to the terms and provisions
set forth in the Indenture.
This Supplement shall be construed as supplemental to the Indenture and
shall form a part thereof, and the Indenture is hereby incorporated by reference
herein and is hereby ratified, approved and confirmed.
This Supplement is being delivered in the State of New York.
-3-
IN WITNESS WHEREOF, the Company has caused this Indenture Supplement No. 1
to be duly executed as of the date first written above by one of its officers
thereunto duly authorized.
MIDWAY AIRLINES CORPORATION
By:______________________________________
Name:
Title:
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Exhibit B
to
Trust Indenture and
Security Agreement
[Form of Certificate]
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE.
ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER
THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS
IS AVAILABLE.
No. _________ $____________
EQUIPMENT NOTE [N_____] OF MIDWAY AIRLINES CORPORATION
SERIES _____
Interest Rate Maturity
___% ____________, 2___
MIDWAY AIRLINES CORPORATION, a Delaware corporation, (herein in such
capacity called the "Company") hereby promises to pay to The First National Bank
of Maryland, as Subordination Agent, or its registered assigns, the principal
sum of ______________________ ________________ Dollars, together with interest
on the principal outstanding from time to time, semiannually on each January 2
and July 2, on such principal sum at the rate per annum set forth above;
provided that, in the event a Registration Event (as defined in the Indenture
referred to below) does not occur on or prior to the date(the "Increase Date")
required pursuant to the Registration Rights Agreement (as defined in the
Indenture referred to below), such interest rate shall be increased by 0.5% from
and including the Increase Date to but excluding the date such Registration
Event does occur. The principal amount of this Equipment Note shall be payable
in installments on the dates and hereto in amounts set forth in Schedule I
hereto. Notwithstanding the foregoing, the final payment made on this Equipment
Note shall be in an amount sufficient to discharge in the full the unpaid
principal amount and all accrued and unpaid interest on, and any other amounts
due under, this Equipment Note. Notwithstanding anything to the contrary
contained herein, if any date on which a payment under this
Equipment Note becomes due and payable is not a Business Day, then such payment
shall not be made on such scheduled date but shall be made ont he next
succeeding Business Day and if such payment is made on such next succeeding
Business Day, no interest shall accrue on the amount of such payment during such
extension.
This Equipment Note shall bear interest at the Past Due Rate on any
principal hereof and on any other amount payable hereunder or under the
Indenture which shall not be paid in full when due (whether at stated maturity,
by acceleration, by mandatory prepayment or otherwise), for the period from and
including the date thereof to but excluding the date the same is paid in full,
payable from time to time on demand of the Indenture Trustee.
Principal and interest and other amounts due hereunder shall be payable at
the office or agency of The First National Bank of Maryland (the "Indenture
Trustee") maintained for such purpose in immediately available funds prior to
12:00 noon. (New York time) on the due date thereof and the Indenture Trustee
shall remit all such amounts received by it to the Holders at such account or
accounts at such financial institution or institutions as the Holders shall have
designated to the Indenture Trustee in writing, in immediately available funds,
such payment to be made if the payment was received prior to 12:00 noon, New
York time by the Indenture Trustee on any Business Day, by 1 p.m. New York time
on such Business Day; otherwise, the Indenture Trustee shall make payment
promptly, but not later than 11:00 A.M. New York time on the next succeeding
Business Day; provided that, at the option of the Indenture Trustee or its
Paying Agent, interest may be paid by mailing a check therefor payable to or
upon the written order of the registered holder entitled thereto at his last
address as it appears on the Register. If any amount payable under this
Certificate, or under the Indenture, falls due on a day that is not a Business
Day, then such sum shall be payable on the next succeeding Business Day, without
(provided that payment is made on such next succeeding Business Day) additional
interest thereon for the period of such extension.
The First National Bank of Maryland is not acting individually hereunder,
but solely as Indenture Trustee.
Any Person, other than the Subordination Agent and any Pass-Through
Trustee, who is acquiring the Equipment Notes will be deemed to represent and
warrant that (i) no assets of an employee benefit plan subject to Title I of
ERISA or an individual retirement account or plan subject to Section 4975 of the
Code, or any trust established under any such plan or account, have been used to
acquire or hold any of the Equipment Notes, or (ii) that one or more
administrative or statutory exemptions from the prohibited transaction rules
under Section 406 of ERISA and Section 4975 of the Code applies to its purchase
and holding of the Equipment Notes such that its purchase and holding of the
Equipment Notes will not result in a non-exempt prohibited transaction under
Section 406 of ERISA and Section 4975 of the Code.
-2-
This Equipment Note is one of a duly authorized issue of Equipment Notes
issued under the Trust Indenture and Security Agreement [N______] dated as of
___________ (the "Indenture") between the Company and the Indenture Trustee.
Capitalized terms not otherwise defined herein shall have the meanings given to
them in the Indenture. Reference is made to the Indenture and all supplements
and amendments thereto (a copy of which is on file with the Indenture Trustee at
its principal corporate trust office) for a more complete statement of the terms
and provisions thereof, including a statement of the properties conveyed,
pledged and assigned thereby, the nature and extent of the security, the
respective rights of the Company, the Indenture Trustee and the Holders, and the
terms upon which the Equipment Notes are, and are to be, executed and delivered,
to all of which terms and conditions in the Indenture each Holder hereof agrees
by its acceptance of this Equipment Note.
This Equipment Note is subject to redemption as provided in Section 6.02
of the Indenture but not otherwise. In addition, this Equipment Note may be
accelerated as provided in Section 7.02 of the Indenture.
The indebtedness evidenced by this Equipment Note is, to the extent and in
the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of the Secured Obligations (as defined in
the Indenture) in respect of [Series A Equipment Notes](1), [Series A and Series
B Equipment Notes](2) [Series A, Series B, and Series C Equipment Notes](3) and
this Equipment Note is issued subject to such provisions. The Holder of this
Certificate, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Indenture Trustee on such Holder's
behalf to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture, and (c) appoints the Indenture
Trustee such Holder's attorney-in-fact for such purpose.*
This Equipment Notes shall be construed in accordance with and governed by
the laws of the State of New York.
This Equipment Note shall not be secured by or be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose unless
authenticated by the Indenture Trustee as evidenced by the manual signature of
one of its authorized officers on the certificate below.
----------
(1) To be inserted in the case of a Series B Certificate.
(2) To be inserted in the case of a Series C Certificate.
(3) To be inserted in the case of a Series D Certificate.
* To be inserted for each Equipment Note other than any Series A
Certificate.
-3-
IN WITNESS WHEREOF, the Company has caused this Equipment Note to be duly
executed in its corporate name by its officer thereunto duly authorized.
Dated: _________________ Midway Airlines Corporation
By______________________________________
Name:
Title:
-4-
[FORM OF INDENTURE TRUSTEE'S
EQUIPMENT NOTE OF AUTHENTICATION]
This is one of the Equipment Notes referred to in the within mentioned
Indenture.
Dated: _______________ THE FIRST NATIONAL BANK OF
MARYLAND, as Indenture Trustee
By______________________________________
Name:
Title:
Schedule I to Certificate
Principal Amortization
Payment Date Principal Amount
------------ ----------------
Exhibit C
Lists of Countries
Exhibit C-1 - Permitted for Re-Registration
Australia Italy
Austria Japan
Belgium Luxembourg
Canada Netherlands
New Zealand
Denmark
Finland Spain
France Sweden
Germany Switzerland
Greece United Kingdom
Iceland
Ireland
Exhibit C-2 - Permitted for Leasing
Argentina Iceland
Australia Ireland
Austria Italy
Belgium Jamaica
Bermuda Japan
Brazil Liechtenstein
Canada Netherlands
Chile Norway
Denmark Portugal
Finland Singapore
France Spain
Germany Sweden
Switzerland
Taiwan
United Kingdom
