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SALE AND LEASE AGREEMENT SECOND AMENDMENT
(Southwest Airlines 1990 Trust II)
Dates as of August 25, 1995
BETWEEN
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
as Owner Trustee
LESSOR
AND
SOUTHWEST AIRLINES CO.,
LESSEE
________________
One Boeing Model 737-2H4 Aircraft
N55SW
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I HEREBY CERTIFY THAT I
HAVE COMPARED THIS DOCUMENT
WITH THE ORIGINAL AND THAT IT
IS A TRUE AND EXACT COPY OF
SUCH ORIGINAL.
WILLIAM C. BOSTON
848-0600
/s/ Kimberlee K. Osby
SALE AND LEASE AGREEMENT SECOND AMENDMENT
(SOUTHWEST AIRLINES 1990 TRUST II)
This SALE AND LEASE AGREEMENT SECOND AMENDMENT (hereinafter referred to as
this "Lease Amendment") dated as of August 25, 1995, between FIRST SECURITY BANK
---------------
OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity but solely as Owner Trustee under a certain Trust Agreement
dated as of December 30, 1991 ("Lessor"), and SOUTHWEST AIRLINES CO., a Texas
------
Lease corporation ("Lessee"),
------
WITNESSETH:
-----------
WHEREAS, First Security Bank of Utah, National Association, as owner
trustee (the "Previous Lessor") under the Trust Agreement dated September 1,
1990, and Lessee are parties to a Sale and Lease Agreement relating to one
Boeing Model 737-2H4 aircraft, bearing manufacturer's serial no.21593 and U.S.
registration number N55SW, and two Pratt & Whitney JT8D-9A engines bearing
manufacturer's serial nos. P707374B and P707334B (such aircraft and engines
being hereinafter called the "Aircraft"), dated as of September 1, 1990 (the
--------
"Original Lease"), whereby, subject to the terms and conditions set forth
--------------
therein, the Previous Lessor has leased to Lessee, and Lessee has leased from
the Previous Lessor, the Aircraft, such lease being evidenced by the execution
and delivery of Sale and Lease Supplement No.1, dated September 27, 1990 ("Lease
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Supplement No. 1"), covering the Aircraft.
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WHEREAS, a counterpart of the Original Lease, attached to and made a
part of Lease Supplement No.1, was recorded by the Federal Aviation
Administration on September 28, 1990, and assigned Conveyance No. KK13034;
WHEREAS, the Owner Trustee assigned the Original Lease and Lease
Supplement No.1 to the Lessor, under the Assignment and Assumption Agreement
dated December 30, 1991, recorded by the Federal Aviation Administration on
January 3, 1992 as Conveyance No. H77982;
WHEREAS, Lessor and Lessee amended the Original Lease by the Sale and
Lease Agreement Amendment (Southwest Airlines 1990 Trust II) dated as of
December 30, 1991 (the "First Amendment"), which instrument was recorded by the
---------------
Federal Aviation Administration on January 3, 1992, and assigned Conveyance No.
H77984;
WHEREAS, the Original Lease as supplement and amended by Lease
Supplement No.1 and the First Amendment is hereinafter called the "Lease";
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WHEREAS, the Lessor, with the written consent of the Owner Participant
and on the written request of a Majority in Interest of Certificate Holders (as
defined in the Indenture), and Lessee wish to amend the Lease by entering into
this Lease Amendment;
-2-
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties hereto agree as follows:
Section 1. Definitions: Amendments to Section 1 of the Lease.
-------------------------------------------------
Capitalized terms used herein without definition shall have the respective
meanings attributed thereto in the Lease. Each definition of any term specified
below in Section 1 of the Lease is amended to read in its respective entirety as
follows:
"Base Lease Term" means the period commencing on the Base Lease
Term Commencement Date and expiring on December 31, 1999.
"Rent Payment Date" means each December 31, March 31, June 30,
and September 30 during the Term, commencing September 30, 1990
through and including December 31, 1995, and thereafter the last day
of each calendar month during the Term, commencing January 31, 1996.
"Stipulated Loss Value" means (i) during the Base Lease Term to
and including December 31, 1995, $12,100,000, (ii) thereafter during
the Base Lease Term, $7,000,000, and (iii) during any Renewal Lease
Term, such amount shall be calculated in accordance with Section 18.1.
Section 2. Amendment to Section 3.3. Section 3.3 of the Lease is
------------------------
amended to read as follows:
"Basic Rent. Lessee hereby agrees to pay to Lessor Basic Rent with
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respect to the Aircraft, in arrears, on each Rent Payment Date, in the
amount of $432,000 through the December 31, 1995 Rent Payment Date and
$80,000 on each Rent Payment Date thereafter; provided that on the
first Rent Payment Date (September 30, 1990), only Basic Rent in the
amount of $4,800 per each day elapsed during the Interim Lease Term
shall be due."
Section 3. Amendments to Section 5.
-----------------------
(a) Section 5.1.7 of the Lease is hereby amended to read as follows:
"Notwithstanding Section 5.1.1 hereof or any other provision of any
Operative Agreement, Lessee shall have no obligation to install on the
Aircraft a hush kit in order to comply with the Stage III noise level
restrictions promulgated by the FAA or otherwise, it being understood
that the Aircraft may be returned to Lessor in Stage II condition."
-3-
(b) The first two sentences of Section 5.3.2 of the Lease are amended
to read as follows:
"Every ESV-l Engine shall have no more than 5,000 hours or cycles
since its last ESV-1. Each ESV-2 Engine shall have no more than 7,000
hours or cycles since its last ESV-2."
Section 4: Effective Date of Amendments. The amendments to the Lease
----------------------------
set forth in Sections 1 through 3 hereof shall be effective as of the date first
set forth above.
Section 5. Ratification. Except as amended hereby, the Lease shall
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remain in full force and effect in all respects.
Section 6. Miscellaneous. This Lease Amendment is being delivered in
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the State of Texas and shall in all respects be governed by, and construed in
accordance with, the laws of the State of Texas, including all matters of
construction, performance and validity. This Lease Amendment 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. All references herein to numbered
sections, unless otherwise indicated, are to sections of this Lease Amendment.
To the extent, if any, that the Lease or this Lease Amendment 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
Amendment may be created through the transfer or possession of any counterpart
other than the original counterpart, which shall be identified as the
counterpart containing on the signature page thereof the receipt therefor
executed by the Indenture Trustee.
-4-
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Sale and
Lease Agreement Second Amendment to be duly executed as of the day and year
first above written.
LESSOR
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual capacity
but solely as Owner Trustee
By /s/ Nancy M. Dahl
---------------------------------
Name: NANCY M. DAHL
Title: ASSISTANT VICE PRESIDENT
LESSEE
SOUTHWEST AIRLINES CO.
By___________________________________
Laura H. Wright
Assistant Treasurer
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IN WITNESS WHEREOF, Lessor and Lessee have each caused this Sale and
Lease Agreement Second Amendment to be duly executed as of the day and year
first above written.
LESSOR
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual capacity
but solely as Owner Trustee
By__________________________________
Name:
Title:
LESSEE
SOUTHWEST AIRLINES CO.
By /s/ Laura Wright
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Laura H. Wright
Assistant Treasurer
-6-
________
The undersigned, Jet Aircraft Holdings, Inc., formerly Cauff, Lippman &
Co., Inc., a Florida corporation, hereby confirms for the benefit of Lessee that
its Guaranty dated as of September 1, 1990 made to Lessee applies with respect
to the Lease as amended hereby.
JET AIRCRAFT HOLDINGS, INC.
By /s/ Wayne D. Lippman
-----------------------
Name: Wayne D. Lippman
Title: E.V.P
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EXECUTION COPY
================================================================================
AMENDMENT AND RESTATEMENT
Dated as of
August 25, 1995
OF
TRUST INDENTURE AND SECURITY AGREEMENT
(Southwest Airlines 1990 Trust II, III & IV)
Dated as of
December 30, 1991
BETWEEN
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
Owner Trustee
AND
MERIDIAN TRUST COMPANY,
Indenture Trustee
___________________________________
Three Boeing Model 737-2H4 Aircraft
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TABLE OF CONTENTS
Page
----
RECITALS.................................................................. 2
GRANTING CLAUSE........................................................... 3
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions................................... 7
SECTION 1.02. Other Definitions..................................... 21
ARTICLE II
THE CERTIFICATES
SECTION 2.01. Form of Certificates.................................. 21
SECTION 2.02. Terms of Certificates................................. 30
SECTION 2.03. Taxes................................................. 31
SECTION 2.04. Payments from Indenture Estate and
Collateral Only....................................... 33
SECTION 2.05. Method of Payment..................................... 34
SECTION 2.06. Application of Payments............................... 35
SECTION 2.07. Termination of Interest in Indenture
Estate................................................ 35
SECTION 2.08. Registration, Transfer and Exchange of
Certificates.......................................... 35
SECTION 2.09. Mutilated, Destroyed, Lost or Stolen
Certificates.......................................... 37
SECTION 2.10. Payment of Expenses on Transfer....................... 37
SECTION 2.11. Prepayment............................................ 38
SECTION 2.12. Provisions Relating to Prepayment..................... 38
SECTION 2.13. Purchase Option....................................... 39
SECTION 2.14. Yield Protection...................................... 42
SECTION 2.15. (Intentionally omitted.).............................. 44
SECTION 2.16. Certificates in Respect of Replacement
Engines............................................... 44
SECTION 2.17. Terms of Subordination................................ 44
(i)
Page
----
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE INDENTURE ESTATE
SECTION 3.01. Basic Rent Distribution and Application
of Amounts upon Rent Default.......................... 48
SECTION 3.02. Lease Termination, Event of Loss and
Replacement........................................... 50
SECTION 3.03. Payment After Indenture Event of
Default, etc.......................................... 51
SECTION 3.04. Certain Payments...................................... 54
SECTION 3.05. Other Payments........................................ 55
SECTION 3.06. Payments to Owner Trustee............................. 55
SECTION 3.07. Investment of Amounts Held by Indenture
Trustee............................................... 56
SECTION 3.08. Series A Holders...................................... 56
ARTICLE IV
COVENANTS; EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of The Bank and the Owner
Trustee............................................... 57
SECTION 4.02. Indenture Event of Default............................ 58
SECTION 4.03. Certain Cure Rights................................... 61
SECTION 4.04. Remedies.............................................. 63
SECTION 4.05. Return of Aircraft, etc............................... 65
SECTION 4.06. Remedies Cumulative................................... 67
SECTION 4.07. Discontinuance of Proceedings......................... 67
SECTION 4.08. Waiver of Past Defaults............................... 68
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notices............................................... 68
SECTION 5.02. Action Upon Instructions.............................. 70
SECTION 5.03. Indemnification....................................... 71
SECTION 5.04. No Duties Except as Specified in
Indenture or Instructions............................. 71
SECTION 5.05. No Action Except Under Leases,
Participation Agreements, Trust
Indenture or Instructions............................. 72
SECTION 5.06. Replacement Engines................................... 72
SECTION 5.07. Indenture Supplements for Replacements................ 74
SECTION 5.08. Effect of Replacement................................. 74
(ii)
Page
----
SECTION 5.09. Certain Rights of Owner Trustee and
Owner Participant..................................... 74
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties....................... 76
SECTION 6.02. Absence of Duties..................................... 76
SECTION 6.03. No Representations or Warranties as to
Aircraft or Documents................................. 77
SECTION 6.04. No Segregation of Monies; No Interest................. 77
SECTION 6.05. Reliance; Agents; Advice of Counsel................... 78
SECTION 6.06. Capacity in Which Acting.............................. 79
SECTION 6.07. Compensation.......................................... 79
SECTION 6.08. May Become Certificate Holder......................... 79
SECTION 6.09. Further Assurances; Financing
Statements............................................ 79
ARTICLE VII
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification.............................. 80
ARTICLE VIII
SUCCESSOR TRUSTEES; SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee..................... 81
SECTION 8.02. Resignation of Indenture Trustee;
Appointment of Successor.............................. 81
SECTION 8.03. Appointment of Separate Trustees...................... 83
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations................. 85
SECTION 9.02. Trustees Protected.................................... 87
SECTION 9.03. Documents Mailed to Holders........................... 87
SECTION 9.04. No Request Necessary for Lease
Supplement or Indenture Supplement.................... 87
(iii)
Page
----
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture........................ 87
SECTION 10.02. No Legal Title to Indenture Estate in
Holders......................................... 88
SECTION 10.03. Sale of Aircraft by Indenture Trustee
is Binding...................................... 88
SECTION 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant
and Certificate Holders......................... 88
SECTION 10.05. No Action Contrary to Lessee's Rights
Under any Lease................................. 89
SECTION 10.06. Notices......................................... 89
SECTION 10.07. Severability.................................... 89
SECTION 10.08. No Oral Modifications or Continuing
Waivers......................................... 90
SECTION 10.09. Successors and Assigns.......................... 90
SECTION 10.10. Headings........................................ 90
SECTION 10.11. Governing Law; Counterpart Form................. 90
SECTION 10.12. Collateral...................................... 90
EXHIBIT A - Form of Indenture Supplement
EXHIBIT B - Form of Tax Certificate
EXHIBIT C - (Intentionally omitted.)
EXHIBIT D - (Intentionally omitted.)
EXHIBIT E - Swap Upside
ANNEX I - Series A Certificates Amortization Schedule
ANNEX II - Series B Certificates Amortization Schedule
(iv)
AMENDMENT AND RESTATEMENT
OF
TRUST INDENTURE AND SECURITY AGREEMENT
AMENDMENT AND RESTATEMENT dated as of August 25, 1995 of TRUST
INDENTURE AND SECURITY AGREEMENT (Southwest Airlines 1990 Trust II, III & IV)
dated as of December 30, 1991 between FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, a national banking association, in its individual capacity only as
expressly stated herein (when acting in such individual capacity called "The
---
Bank", and otherwise solely as owner trustee under the Trust Agreement referred
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to below (in such capacity, the "Owner Trustee")), and MERIDIAN TRUST COMPANY, a
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Pennsylvania trust company (the "Indenture Trustee").
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WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Trustee and the Indenture Trustee have entered into
(a) a Trust Indenture and Security Agreement (Southwest Airlines 1990 Trust II,
III and IV) dated as of December 30, 1991, as supplemented by the Trust
Indenture Supplement No. 1 thereto dated as of December 31, 1991 (as so
supplemented, the "1991 Indenture") relating to three Boeing model 737-2H4
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aircraft bearing U.S. registration numbers N55SW, N565W and N57SW and
manufacturer's serial numbers 21593, 21721 and 21722, respectively and six (6)
Pratt and Whitney JT8D-9A Engines bearing respective serial numbers P707374B,
P707334B, P674648B, P707371B, P687758B and P707364B, (b) a Special Participation
Agreement (Southwest Airlines 1990 Trust II, III & IV) dated as of December 30,
1991, among CL Aircraft XXXI, Inc., as Owner Participant and a Guarantor of the
Series B Certificates (the "Owner Participant"), CL Aircraft XXXI, Inc., CL
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Aircraft XXXII, Inc. and CL Aircraft XXXIII, Inc., as Initial Owner Participants
(collectively, the "Initial Owner Participants"), Cauff, Lippman & Company,
--------------------------
Inc., as a Guarantor of the Series B Certificates (together with the Owner
Participant, the "Guarantors of the Series B Certificates"), First Security Bank
---------------------------------------
of Utah, National Association, as Owner Trustee (in such capacity under the
Trust Agreements dated as of September 1, 1990 relating to the Southwest
Airlines 1990 Trusts II, III and IV, the "Existing Owner Trustee" and in such
----------------------
capacity under the Trust Agreement dated as of December 30, 1991 relating to the
Southwest Airlines 1990 Trust II, III & IV, the "Owner Trustee"), Meridian Trust
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Company, as Indenture Trustee (the "Indenture Trustee"),
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TRUST INDENTURE
2
The Chase Manhattan Bank, N.A., as Senior Lender (the "Senior Lender") and
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Progress Credit Corporation, as Subordinated Lender and Initial Lender (the
"Initial Lender") (the Senior Lender and the Initial Lender collectively
--------------
referred to herein as the "Loan Participants") and (c) various other documents;
-----------------
WHEREAS, the 1991 Indenture provides, among other things (i) for the
issuance by the Owner Trustee to the Loan Participants of Certificates as
provided in the Special Participation Agreement and (ii) for the assignment,
mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of
the Indenture Estate thereunder, among other things, of certain of the Owner
Trustee's right, title and interest in and to the Aircraft and the Indenture
Documents and the payments and other amounts received thereunder or in respect
thereof in accordance with the terms hereof, as security for, among other
things, the Owner Trustee's and Lessee's obligations to the Loan Participants
and the Certificate Holders, and for the benefit and security of the Loan
Participants and the Certificate Holders;
WHEREAS, the Owner Trustee and Southwest Airlines Co. (the "Lessee")
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have entered into three Leases, each relating to one of the three Aircraft, each
of which Leases has been supplemented by a Lease Supplement thereto assigned by
an Assumption Agreement and amended by a First Lease Amendment thereto;
WHEREAS, the Owner Trustee and Lessee have executed three Second Lease
Amendments providing, among other things, for the extension of the Base Lease
Term (as defined therein) and the recalculation of Basic Rent and Stipulated
Loss Value (each as defined therein);
WHEREAS, the Owner Trustee and the Indenture Trustee have agreed to
execute this Amendment and Restatement of Trust Indenture and Security Agreement
to provide, among other things, for the extension of the maturity of the Series
A Certificates and the Series B Certificates and to provide replacement Series A
Certificates to the Loan Participants designated as receiving same pursuant to
Section 1.1(a) (ii) of the Special Participation Agreement (or their nominees)
and replacement Series B Certificates to the Loan Participants designated as
receiving same pursuant to Section 1.1(a) (ii) of the Special Participation
Agreement (or their nominees), each Certificate in the form set forth in Section
2.01 hereof;
TRUST INDENTURE
3
WHEREAS, all things have been done to make the Certificates, 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 legal, valid
and binding obligation of the Owner Trustee, for the uses and purposes herein
set forth and in accordance with its terms, have been done and performed and
have happened;
The parties hereto agree as follows and that, effective as of the date
hereof, the 1991 Indenture shall be amended and restated to read in its entirety
as follows:
-- GRANTING CLAUSE --
NOW, THEREFORE, THIS AMENDMENT AND RESTATEMENT OF TRUST INDENTURE AND
SECURITY AGREEMENT WITNESSETH, that, to secure (i) the prompt payment of the
principal of and Premium Amount (if any) and interest on, and all other amounts
due with respect to (a) the Series A Certificates and (b) the Series B
Certificates in each case from time to time outstanding hereunder, (ii) the
performance and observance by the Owner Trustee and the Owner Participant of all
the agreements, covenants and provisions for the benefit of the Loan
Participants and the Certificate Holders herein and in each Participation
Agreement, the Special Participation Agreement and the Certificates contained,
(iii) the prompt payment of any and all amounts from time to time owing
hereunder and under each Participation Agreement and the other Operative
Agreements by the Owner Trustee, the Owner Participant or the Lessee to the Loan
Participants and the Certificate Holders and (iv) the performance and observance
by the Guarantors of the Series B Certificates of all the agreements, covenants
and provisions for the benefit of the Loan Participants and the Certificate
Holders in each Participation Agreement, the Special Participation Agreement and
the Guarantee, and for the uses and purposes and subject to the terms and
provisions hereof, and in consideration of the premises and of the covenants
herein contained, and of the acceptance of the Certificates by the holders
thereof, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee
at or before the delivery hereof, the receipt whereof is hereby acknowledged,
the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed,
mortgaged, pledged and confirmed, and does hereby grant, bargain,
TRUST INDENTURE
4
sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture
Trustee and its successors and assigns, for the security and benefit of the Loan
Participants and the Certificate Holders, as aforesaid, a fir st priority
security interest in and first mortgage lien upon, all estate, right, title and
interest of the Owner Trustee in, to and under the following described property,
rights and privileges, other than Excluded Payments (which collectively,
excluding Excluded Payments but including all property hereafter specifically
subjected to the Lien of this Indenture by an Indenture Supplement or any other
mortgage supplemental hereto, shall constitute the "Indenture Estate"), to wit:
----------------
1. each Aircraft (including each Airframe and the Engines) and (in
the case of the Engines) all replacements thereof and substitutions
therefor to which the Owner Trustee shall from time to time acquire title
as provided herein and in any related Lease, all as more particularly
described in the Indenture Supplement executed and delivered with respect
to such Aircraft or any such replacements or substitutions therefor, as
provided in this Indenture, and all records, logs and other documents at
any time maintained with respect to the foregoing property;
2. each Lease and all Rent under each thereof, including, without
limitation in respect of each Lease, all Basic Rent, Supplemental Rent,
insurance proceeds and requisition and other payments of any kind under
each thereof and including all rights of the Owner Trustee to execute any
election or option or to give any notice, consent, waiver, or approval
under or in respect of any Lease or to accept any surrender of any Aircraft
or any part thereof, as well as any rights, powers or remedies on the part
of the Owner Trustee, whether arising under any Lease or by statute or at
law or in equity, or otherwise, arising out of any Lease Event of Default;
3. the Participation Agreements, the Special Participation
Agreement, the Bills of Sale, the New Bills of Sale and all other Indenture
Documents (including, without limitation, all rights to amounts paid or
payable to the Owner Trustee thereunder and all rights to enforce such
payments);
TRUST INDENTURE
5
4. all tolls, rents, issues, profits, revenues and other income of
the property subjected or required to be subjected to the Lien of this
Indenture, including all payments or proceeds in respect thereof after
termination of any Lease with respect to any Aircraft, any Airframe, any
Engine or any Part subject to such Lease, or otherwise, as the result of
the sale, lease or other disposition thereof, and all estate, right, title
and interest of every nature whatsoever of the Owner Trustee in and to the
same and every part thereof;
5. all insurance and requisition proceeds and all other payments of
any kind with respect to any Aircraft, including but not limited to the
insurance required under Section 11 of the Lease to which such Aircraft is
subject;
6. all monies and securities deposited or required to be deposited
with the Owner Trustee or the Indenture Trustee pursuant to any term of
this Indenture or any Lease or required to be held by the Indenture Trustee
hereunder; and
7. all proceeds of the foregoing.
The Owner Trustee is concurrently with the delivery hereof delivering to the
Indenture Trustee an executed chattel paper original counterpart of each Lease,
the Lease Supplement, the First Lease Amendment, Assumption Agreement and the
Second Lease Amendment in respect of each Aircraft, together with executed
copies of the Trust Agreement and each of the other Indenture Documents (other
than the FAA bills of sale). All property referred to in this Granting Clause,
whenever acquired by the Owner Trustee, shall secure all obligations under and
with respect to the Certificates at any time outstanding. Any and all
properties referred to in this Granting Clause which are hereafter acquired by
the Owner Trustee, shall, without further conveyance, assignment or act by the
Owner Trustee or the Indenture Trustee thereby become and be subject to the
security interest hereby granted as fully and completely as though specifically
described herein.
-- HABENDUM CLAUSE --
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns,
TRUST INDENTURE
6
in trust for the benefit and security of the Loan Participants and the
Certificate Holders, and for the uses and purposes and subject to the terms and
provisions set forth in this Indenture.
It is expressly agreed that anything herein contained to the contrary
notwithstanding, the Owner Trustee shall remain liable under the Indenture
Documents to perform all of the obligations assumed by it thereunder, all in
accordance with and pursuant to the terms and provisions thereof, and the
Indenture Trustee and the Loan Participants and the Certificate Holders shall
have no obligation or liability under any thereof by reason of or arising out of
the assignment hereunder, nor shall the Loan Participants or the Certificate
Holders be required or obligated in any manner to perform or fulfill any
obligations of the Owner Trustee under or pursuant to any of the Indenture
Documents, except as therein or herein expressly provided, to make any payment,
or to make any inquiry as to the nature or sufficiency of any payment received
by it, or present or file any claim, or take any action to collect or enforce
the payment of any amounts which may have been assigned to it or to which it may
be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee the
true and lawful attorney of the Owner Trustee, irrevocably, with full power (in
the name of the Owner Trustee or otherwise) to ask, require, demand, receive,
compound and give acquaintance for any and all monies and claims for monies (in
each case including insurance and requisition proceeds) due and to become due
under or arising out of the Indenture Documents and all other property which now
or hereafter constitutes part of the Indenture Estate, to endorse any checks or
other instruments or orders in connection therewith and to file any claims or to
take any action or to institute any proceedings which the Indenture Trustee may
deem to be necessary or advisable in the premises. Under each Lease the Lessee
is directed to make all payments of Rent (other than Excluded Payments) and all
other amounts which are required to be paid to or deposited with the Owner
Trustee pursuant to such Lease (other than Excluded Payments), directly to the
Indenture Trustee at such address or addresses as the Indenture Trustee shall
specify, for application as provided in this Indenture. The Owner Trustee
agrees that promptly on receipt thereof, it will transfer to the Indenture
Trustee any and all monies from time to time received by it constituting part of
the Indenture Estate, for distribution by the Indenture Trustee pursuant to this
Indenture.
TRUST INDENTURE
7
The Owner Trustee does hereby warrant and represent that (except as
permitted herein) it has not assigned or pledged any of its right, title and
interest hereby assigned to anyone other than the Indenture Trustee other than
pursuant to the Prior Mortgages, which Mortgages have been released, discharged
and satisfied of record.
The Owner Trustee does hereby ratify and confirm the Indenture
Documents and does hereby agree that (except as permitted herein) it will not
take or omit to take any action, the taking or omission of which would result in
an alteration or impairment of any of the Indenture Documents or of any of the
rights created by any thereof or the assignment hereunder.
Notwithstanding the Granting Clause or any of the preceding
paragraphs, there are hereby expressly excluded from the foregoing grant,
bargain, sale, assignment, transfer, conveyance, mortgage, pledge and security
interest all Excluded Payments. Further, nothing in the Granting Clause or any
of the preceding paragraphs shall impair in any respect the rights of the Owner
Trustee or the Owner Participant under Section 5.09.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions. For all purposes of this
-------------------
Indenture the following terms shall have the following meanings (such
definitions to be equally applicable to both the singular and plural forms of
the terms defined). Any agreement referred to below shall mean such agreement
as amended, supplemented and modified from time to time in accordance with the
applicable provisions thereof and of the other Operative Agreements. Unless
otherwise specified, Section, Article, Exhibit and Annex references are to
Sections, Articles, Exhibits and Annexes of this Indenture.
"Affiliate" of any Person shall mean any other Person directly or
---------
indirectly controlling, directly or indirectly controlled by, or under
direct or indirect common control with, such Person.
TRUST INDENTURE
8
"Aircraft" means the Airframes together with the Engines as further defined
--------
in each Lease.
"Airframes" means each of the Boeing 737-2H4 Aircraft, serial numbers
---------
21593, 21721, and 21722 bearing respective U.S. Registration Numbers N5SSW,
NS6SW, and NS7SW as further defined in each Lease.
"Assumption Agreement" means each Assignment and Assumption Agreement
--------------------
delivered by the Owner Trustee and an Existing Owner Trustee, in substantially
the form of Exhibit I to the Special Participation Agreement.
"Base Rate" means, for any day, the higher of (a) the Federal Funds Rate
---------
for such day plus 1/2 of 1% per annum or (b) the Prime Rate for such day. Each
change in any interest rate provided for herein based upon the Base Rate
resulting from a change in the Base Rate shall take effect at the time of such
change in the Base Rate.
"Basic Rate" means, collectively, the "Basic Rent" as defined in each
----------
Lease.
"Bills of Sale" means, collectively, the "Manufacturer's FAA Bill of Sale"
-------------
and the "Manufacturer's Warranty Bill of Sale" as defined in each Lease.
"Break Funding Cost" means, for any Series A Certificate, the amount equal
------------------
to the sum of LIBOR Break Amount and Swap Break Amount for such Series A
Certificate.
"Calculation Agent" means The Chase Manhattan Bank (National Association),
-----------------
or its designee.
"Certificates" means, collectively, the Series A Certificates and the
------------
Series B Certificates.
"Certificate Holder" or "holder" means, at any time, any holder of one or
------------------ ------
more Certificates. For all purposes of this Indenture, including, without
limitation, Section 2.17 and Article III, reference to a holder of a given
Series of Certificates shall mean such Person in such capacity and not in its
capacity as the holder of any other Series of Certificates
TRUST INDENTURE
9
"Certificate Register" has the meaning specified in Section 2.08.
--------------------
"Closing Date" means December 31, 1991.
------------
"Collateral" means, in the case of the Series B Certificates, amounts paid
-----------
or payable, and all rights and benefits under, and the collateral under, the
Guarantee.
"Corporate Trust Office" means the principal office of the Indenture
-----------------------
Trustee located at 35 North Sixth Street, Reading, Pennsylvania, 19601, or such
other office at which the Indenture Trustee's corporate trust business shall be
administered and which the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Trustee, the Owner Participant and each
Certificate Holder.
"Designated Maturity" means, as at any date of determination, the then
-------------------
remaining weighted average life of the Series A Certificates subject to
prepayment on
"Dollars" and "$" means lawful currency of the United States of America.
------- -
"Engines" means each of the six (6) Pratt & Whitney JT8D-9A Engines, serial
-------
numbers P707374B, P707334B, P674648B, P707371B, P687758B and P707364B, as
further defined in each Lease.
"Excluded Payments" means (i) subject to the provisions of Section 4.03,
-----------------
indemnity payments and interest in respect thereof paid or payable by the Lessee
in respect of The Bank in its individual capacity or the Owner Participant
pursuant to Section 8.1 or 8.2 of any Participation Agreement, (ii) proceeds of
public liability insurance (or any similar payment from a governmental
authority) in respect of any Aircraft payable to, or as a result of losses
suffered by, The Bank in its individual capacity or the Owner Participant, (iii)
proceeds of insurance maintained with respect to any Aircraft by or for the
benefit of the Owner Participant (whether directly or through the Owner Trustee)
in excess of that required to be maintained by the Lessee under Section 11 of
any Lease, provided that no such insurance impairs or reduces coverage under any
insurance required to be maintained by the Lessee under any said Section 11,
TRUST INDENTURE
10
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnification Agreement, (V) Transaction Costs paid or
payable to The Bank in its individual capacity or the Owner Participant pursuant
to Section 12.2 of any Participation Agreement and (vi) any right to enforce the
payment of any amount described in clauses (i) through (v) above and the
proceeds thereof.
"Existing Owner Trustees" means the "Existing Owner Trustees" party to the
-----------------------
Special Participation Agreement.
"Federal Funds Rate" means for any day, the rate per annum (rounded
------------------
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (i) if the day for which such rate is to be determined is not
a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (ii) if such rate is not so published for any day,
the Federal Funds Rate for such day shall be the average rate charged to the
Calculation Agent on such day on such transactions as determined by the
Calculation Agent.
"First Lease Amendment" means each of the Sale and Lease Agreement
---------------------
Amendments as further defined in the definition of Lease and as defined in the
Special Participation Agreement.
"Guarantee" means the Guarantee 555W, 56SW and 57SW dated as of December
---------
30, 1991 by the Guarantors of the Series B Certificates in favor of the holders
of the Series B Certificates, as the same may be modified, supplemented, amended
and in effect from time to time.
"Guarantors of the Series B Certificates" means Cauff, Lippman & Company,
---------------------------------------
Inc., a Florida corporation and the Owner Participant.
"Guarantee Beneficiary" has the meaning specified in the Guarantee.
---------------------
TRUST INDENTURE
11
"Indenture", "this Indenture", and "the Trust Indenture" mean this
---------- -------------- --------- ---------
Amendment and Restatement of Trust Indenture and Security Agreement, including
any Indenture Supplement and each other supplement from time to time entered
into pursuant hereto.
"Indenture Default" means an Indenture Event of Default or an event which
------------------
with notice or lapse of time or both would became an Indenture Event of Default.
"Indenture Documents" means each Participation Agreement, the Special
-------------------
Participation Agreement, each Lease (including Lease Supplements) each
Assumption Agreement, the Bills of Sale aid the New Bills of Sale.
"Indenture Estate" means the "Indenture Estate" as defined in the Granting
----------------
Clause hereof.
"Indenture Event of Default" has the meaning specified in Section 4.02.
--------------------------
"Indenture Supplement" means a supplement to this Indenture substantially
--------------------
in the form of Exhibit A, which shall particularly describe each Airframe and
Engines, or any Replacement Engine, included in the property of the Owner
Trustee covered by this Indenture.
"Initial Lender" means Progress Credit Corporation, a Florida corporation.
--------------
"Initial Owner Participants" means the "Initial Owner Participants" party
---------------------------
to the Special Participation Agreement.
"Interest Payment Date" means, during the period from and including the
---------------------
Closing Date to and including December 31, 1995, March 31, June 30, September 30
and December 31 of each year, the first of which shall be December 31, 1991; and
thereafter, the thirtieth day of each calendar month, or if there is no
thirtieth day, the last day of the month.
"Interest Rate" means, during the period from and including the Closing
-------------
Date to and including December 31, 1995, 7.57% and thereafter, 7.94% per annum.
TRUST INDENTURE
12
"Lease" means any of (i) the Sale and Lease Agreement (Southwest Airlines
-----
1990 Trust II) dated as of September 1, 1990 between the Lessee and the Existing
Owner Trustee, including Lease Supplement No. 1 thereto recorded with the FAA on
September 28, 1990, as conveyance number KK13034, the Assumption Agreement,
dated December 30, 1991 between the Existing Owner Trustee and the Owner
Trustee, recorded by the FAA on January 3, 1992 as conveyance number H77982, the
First Lease Amendment in respect thereof recorded with the FAA on January 3,
1992 as conveyance number H77984, the Second Lease Amendment in respect thereof
and each other supplement or amendment heretofore or hereafter entered into
pursuant to the terms of such Lease, (ii) the Sale and Lease Agreement
(Southwest Airlines 1990 Trust III) dated as of September 1, 1990 between the
Lessee and the Owner Trustee, including Lease Supplement No. 1 thereto recorded
with the FAA on September 28, 1990, as conveyance number K91061, the Assumption
Agreement , dated December 30, 1991, between the Existing Owner Trustee and the
Owner Trustee, recorded by the FAA on January 2, 1992, as conveyance number
H77978, the First Lease Amendment in respect thereof recorded with the FAA on
January 2, 1992 as conveyance number H77980, the Second Lease Amendment in
respect thereof and each other supplement or amendment heretofore or hereafter
entered into pursuant to the terms of such Lease, and (iii) the Sale and Lease
Agreement (Southwest Airlines 1990 Trust IV) dated as of September 1, 1990
between the Lessee and the Owner Trustee, including Lease Supplement No. 1
thereto recorded with the FAA on September 28, 1990, as conveyance number
H72737, the Assumption Agreement, dated December 30, 1991, between the Existing
Owner Trustee and the Owner Trustee, recorded by the FAA on January 3, 1992, as
conveyance number H77986, the First Lease Amendment in respect thereof recorded
with the FAA on January 3, 1992 as conveyance number H77988, the Second Lease
Amendment in respect thereof and each other supplement or amendment heretofore
or hereafter entered into pursuant to the terms of such Lease.
TRUST INDENTURE
13
"Lease Default" means a Lease Event of Default or an event which with
-------------
notice or lapse of time or both would become a Lease Event of Default.
"Lease Event of Default" means any of the events specified in Section 14 of
----------------------
any Lease.
"Lease Supplements" means, collectively the "Lease Supplement" as defined
-----------------
in each Lease.
"Lending Office" means, for any holder of a Series A Certificate, the
--------------
office from which it maintains the loan evidenced by its Series A Certificates.
"Lessee" means Southwest Airlines Co., a Texas corporation, or any
------
successor or assignee thereof as permitted by Section 7.4 of any Participation
Agreement.
"LIBOR" means the London Interbank Offered Rate.
-----
"LIBOR Break Amount" means, for any Series A Certificate as at any date of
------------------
prepayment, purchase or acceleration of such Series A Certificate, an amount
equal to the excess, if any, of (i) the amount of interest which otherwise would
have accrued on the principal amount prepaid, purchased or accelerated for the
period from the date of such prepayment, purchase or acceleration to the next
subsequent Interest Payment Date at the applicable "Floating Rate" (i.e., LIBOR-
based rate) of interest in effect on such date (exclusive of any spread) under
the Swap Transaction over (ii) the interest component of the amount the holder
of such Series A Certificate would have bid in the London interbank market for
Dollar deposits of leading banks in amounts comparable to such principal amount
and with maturities comparable to such period.
"Loan Participants" means the Loan Participants party to the Special
-----------------
Participation Agreement, and their respective successors and assigns.
"Majority A Holders" means, as of any date of determination thereof, the
------------------
holders of not less than a majority in aggregate outstanding principal amount of
all Series A Certificates.
TRUST INDENTURE
14
"Majority B Holders" means, as of any date of determination thereof, the
------------------
holders of not less than a majority in aggregate outstanding principal amount of
all Series B Certificates.
"Majority in Interest of Certificate Holders" means, as of any date of the
-------------------------------------------
determination thereof, the Majority A Holders and the Majority B Holders;
provided, however, that (i) such term shall mean the Majority A Holders if an
Indenture Event of Default shall have occurred and be continuing (unless all
principal, interest, Premium Amount and all other amounts due on the Series A
Certificates and to the holders thereof under the Operative Agreements shall
have been theretofore paid in full) and (ii) such term shall mean the Majority B
Holders in the case of any direction, demand, notice or other action in respect
of the Collateral for the benefit of the holders of the Series B Certificates.
For all purposes of the foregoing definition and the definition of "Majority A
Holders" and "Majority B Holders", in determining as of any date the then
aggregate outstanding principal amount of Certificates of any Series, there
shall be excluded any Certificates, if any, held by the Owner Trustee, the Owner
Participant, the Guarantors of the Series B Certificates or the Lessee or any
Affiliate of any thereof (unless the Owner Trustee, the Owner Participant, the
Guarantors of the Series B Certificates, the Lessee or their respective
Affiliates, as the case may be, own all Certificates then outstanding), or any
interest of the Owner Trustee or the Owner Participant in any Certificate or any
interest of the holder of a Series B Certificate in a Series A Certificate, in
either case, by reason of subrogation pursuant to Section 4.03 or otherwise.
"Make-Whole Amount" means, with respect to any Series A Certificate, an
-----------------
amount equal to the excess, if any, of (i) the present value, as of the date of
the relevant prepayment, purchase or acceleration of Series A Certificates, of
the respective installments of principal of and interest on such Series A
Certificate that, but for such prepayment, purchase or acceleration, would have
been payable on Payment Dates or Interest Payment Dates, as the case may be,
after such prepayment, purchase or acceleration (assuming for this purpose no
changes in the Interest Rate for the Series A Certificates from that in effect
with respect to the relevant prepayment, purchase or acceleration), over (ii)
the
TRUST INDENTURE
15
principal amount of such Series A Certificate then being prepaid. Such present
value shall be determined by discounting the amounts of such installments from
their respective Payment Dates or Interest Payment Dates, as the case may be, to
the date of such prepayment at a rate equal to the Treasury Rate plus 1/2 of 1%
(such discounting to be calculated on the basis of a 360-day year of twelve 30-
day months).
"New Bills of Sale" has the meaning assigned to such term in section 1.1(a)
-----------------
(i) of the Special Participation Agreement.
"1991 Indenture" means the Trust Indenture and Security Agreement
--------------
(Southwest Airlines 1990 Trust II, III and IV) dated as of December 30, 1991
between the Owner Trustee and the Indenture Trustee, as supplemented by the
Indenture Supplement No. 1 thereto dated December 31, 1991, recorded by the FAA
as one instrument on January 3, 1992, as conveyance number H77989.
"Non-U.S. Person" means any Person other than (i) a citizen or resident of
---------------
the United States of America, its territories and possessions (including the
Commonwealth of Puerto Rico and all other areas subject to its jurisdiction)
(for purposes of this definition, the "United States"), (ii) a corporation,
partnership or other entity created or organized under the laws of the United
States or any political subdivision thereof or therein or (iii) an estate or
trust that is subject to United States federal income taxation regardless of the
source of its income.
"Operative Agreements" means the Indenture Documents, the Trust Agreement,
--------------------
this Indenture, the Loan Certificates and the Guarantee.
"Owner Participant" means CL Aircraft XXXI, Inc., a Florida corporation,
-----------------
and transferees thereof as and to the extent permitted by Section 10.1 of each
Participation Agreement and Section 8.01 of the Trust Agreement.
"Participation Agreement" means any of (i) the Participation Agreement
-----------------------
(Southwest Airlines 1990 Trust II) dated as of September 1, 1990 among the
Lessee, Cauff, Lippman & Company, Inc., the Owner Participant (as assignee of
the
TRUST INDENTURE
16
original Owner Participant party thereto), the Initial Lender and the Owner
Trustee (as assignee of the original Owner Trustee party thereto), (ii) the
Participation Agreement (Southwest Airlines 1990 Trust III) dated as of
September 1, 1990 among the Lessee, Cauff, Lippman & Company, Inc., the Owner
Participant (as assignee of the original Owner Participant party thereto), the
Initial Lender and the Owner Trustee (as assignee of the original Owner Trustee
party thereto), and (iii) the Participation Agreement (Southwest Airlines 1990
Trust IV) dated as of September 1, 1990 among the Lessee, Cauff, Lippman &
Company, Inc., the Owner Participant (as assignee of the original Owner
Participant party thereto), the Initial Lender and the Owner Trustee (as
assignee of the original Owner Trustee party thereto), as any of the same may be
modified, supplemented, amended and in effect from time to time.
"Parts" means, in respect of any Aircraft, Airframe or Engine, the "Parts"
-----
as defined in the Lease to which such Aircraft, Airframe or Engine is subject.
"Past Due Rate" means, with respect to the principal of or interest or
-------------
Premium Amount, if any, on any Certificate not paid in full when due (whether at
stated maturity, by acceleration or otherwise), or with respect to any other
amount payable to the holder thereof thereon or under this Indenture not so paid
in full when due, a rate of interest per annum equal to 2% above the higher of
(x) the Interest Rate or (y) the Base Rate (in either case computed on the basis
of a year of 360 days and actual days elapsed).
"Payment Date" means, (i) with respect to Series A Certificates, each
------------
Interest Payment Date listed under the Schedule of Principal Payments for such
Series of Certificates set forth in Section 2.02(b) (1) and (ii) with respect to
Series B Certificates, each Interest Payment Date on which principal thereon is
scheduled for payment pursuant to Section 2.02(b) (2).
"Permitted Investments" means those investments described in Section 22.1
---------------------
of any Lease.
"Premium Amount" means, with respect to each Series A Certificate, to the
--------------
fullest extent permitted by law, an amount equal to the sum of (i) (a) if the
holder thereof is
TRUST INDENTURE
17
a bank, a bank operating subsidiary or otherwise a floating rate lender, the
Break Funding Cost in respect of such Certificate or (b) if the holder thereof
is not a bank, a bank operating subsidiary or otherwise a floating rate lender,
the Make-Whole Amount in respect of such Certificate plus (ii) so long as such
----
amount is not payable in connection with an Indenture Event of Default that is a
Lease Event of Default, as of any date of the determination thereof, the Special
Premium.
"Prime Rate" means the rate of interest from time to time announced by the
----------
Calculation Agent at its principal office as its prime commercial lending rate.
"Prior Mortgages" means any of (i) the Security Agreement and Assignment of
---------------
Leases N555W dated as of September 1, 1990 between the Existing Owner Trustee
party thereto and the Initial Lender, which was previously released by the
General Release of Mortgage, dated December 31, 1991, executed by the Initial
Lender recorded by the FAA on January 3, 1992, as conveyance number H77983, (ii)
the Security Agreement and Assignment of Leases N565W dated as of September 1,
1990 between the Existing Owner Trustee party thereto and the Initial Lender,
which was previously released by the General Release of Mortgage, dated December
31, 1991, executed by the Initial Lender recorded by the FAA on January 2, 1992,
as conveyance number H77979 and (iii) the Security Agreement and Assignment of
Leases NS7SW dated as of September 1, 1990 between the Existing Owner Trustee
party thereto which was previously released by the General Release of Mortgage,
dated December 31, 1991, executed by the Initial Lender, recorded by the FAA on
January 3, 1992, as conveyance number H77988.
"Regulatory Change" shall mean, with respect to any holder of a Series A
-----------------
Certificate, any change after the date of this Indenture in United States
Federal, state or foreign law or regulations, or the adoption or making after
such date of any interpretation, directive or request applying to a class of
banks including such Certificate Holder of or under any United States Federal,
state or foreign law or regulations (whether or not having the force of law) by
any court or governmental or monetary authority charged with the interpretation
or administration thereof.
TRUST INDENTURE
18
"Rent" means, collectively, the "Rent" as defined in each Lease.
----
"Replacement Engine" means any engine substituted for an Engine pursuant to
------------------
Section 5.06.
"Second Lease Amendment" means any of (i) the Sale and Lease Agreement
----------------------
Second Amendment (Southwest Airlines 1990 Trust II) dated as of August 25, 1995
between the Lessee and the Owner Trustee, (ii) the Sale and Lease Agreement
Second Amendment (Southwest Airlines 1990 Trust III) dated as of August 25, 1995
between the Lessee and the Owner Trustee and (iii) the Sale and Lease Agreement
Second Amendment (Southwest Airlines 1990 Trust IV) dated as of August 25, 1995
between the Lessee and the Owner Trustee each of which are being filed
simultaneously herewith.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Series" means one or more of the series of Certificates issued pursuant to
------
Article II of this Indenture.
"Series A Certificates" means the "Series A Loan Certificates" issued
---------------------
pursuant to Section 2.02(a) and any such certificates issued in exchange or
replacement therefor pursuant to Section 2.08 or 2.09.
"Series B Certificates" means the "Series B Loan Certificates" issued
---------------------
pursuant to Section 2.02(a) and any such certificates issued in exchange or
replacement therefor pursuant to Section 2.08 or 2.09.
"Special Participation Agreement" means the Special Participation Agreement
-------------------------------
(Southwest Airlines 1990 Trust II, III & IV) dated as of December 30, 1991
between the Owner Trustee, the Existing Owner Trustees, the Indenture Trustee,
the Loan Participants, the Initial Lender, the Owner Participant, the Initial
Owner Participants and the Guarantors of the Series B Certificates.
"Special Premium" means a premium equal to (x) on or prior to December 31,
---------------
1992, 2%, (y) thereafter through (and including) December 31, 1994, 1% and (z)
thereafter, 0%, of
TRUST INDENTURE
19
the principal amount of such Certificate subject to prepayment.
"Supplemental Rent" means, collectively "Supplemental Rent" as defined in
-----------------
each Lease.
"Swap Break Amount" means, as of any date of determination thereof, and for
-----------------
any Series A Certificate, the lesser of:
(a) the amount the Swap Counterparty will require in accordance with
market practice to have paid to it on such date by the holder of such Series A
Certificate to terminate the Swap Transaction of such holder on such date; or
(b) the amount a Reference Market-maker (as defined in the Swap Form with
the "party" referred to in such definition being the Swap Counterparty)
designated by the Owner Trustee and reasonably acceptable to the Swap
Counterparty will quote to such holder and the Owner Trustee as the amount it
will require to be paid to it on such date by such holder to assume the
obligations of such holder under the Swap Transaction;
provided that if the Swap Counterparty and the Reference Market-maker quote the
- --------
identical amount, or if the Reference Market-maker fails to quote or, having
quoted, fails or refuses to assume the aforesaid obligations of such holder in
accordance with its "quote" or the Swap Counterparty refuses (acting in
accordance with the Swap Form) to accept performance by such Reference Market-
maker, the amount computed in accordance with clause (a) above shall be the
"Swap Break Amount".
"Swap Counterparty" means Chase Securities, Inc., in the case of the swap
-----------------referenced in clause (i) of "Swap Transaction" below and
(ii) The Chase Manhattan Bank (National Association) in the case of the swap
referenced in clause (ii) of that definition.
"Swap Transaction" means (i) the interest rate exchange transaction entered
----------------
into by the Senior Lender and the Swap Counterparty, which transaction is
governed by the Interest Rate and Currency Exchange Agreement published in 1987
by, and incorporating by reference therein the definitions and
TRUST INDENTURE
20
provisions contained in, the 1991 ISDA Definitions of the International Swap
Dealers Association, Inc. (the "Swap Form") and the terms of the confirmation of
which provide for the exchange of three month LIBOR plus a Spread for the
Interest Rate in respect of a notional amount equal to the scheduled aggregate
principal amount of the Series A Certificates outstanding from time to time, as
said swap transaction may be assigned in whole or in part; and (ii) in addition,
at all times after December 29, 1995, a swap that may exist or, if it does not
Exist shall be deemed to exist between the Senior Lender and Swap Counterparty,
which transaction is governed by the Interest Rate and Currency Exchange
Agreement published in 1992 by, and incorporating by reference therein the
definitions and provisions contained in, the 1991 ISDA Definitions of the
International Swap Dealers Association, Inc. (the "New Swap Form") and the terms
-------------
of the confirmation of which provide for the exchange of one month LIBOR plus a
Spread for the Interest Rate in respect of a notional amount of the Series A
Certificates outstanding from time to time, as said swap transaction may be
assigned in whole or in part.
"The Bank" means First Security Bank of Utah, National Association, a
--------
national banking association, in its individual capacity and any successor
financial institution (in its individual capacity) acting as Owner Trustee
hereunder and under the Trust Agreement.
"Treasury Rate" means for any Designated Maturity, the yield to maturity
-------------
of, and resulting from the bidding for, the most recently auctioned United
States Treasury Notes with maturities equal to such Designated Maturity, and if
United States Treasury Notes with such a maturity are not then auctioned and
publicly traded, the weighted average yield to maturity of United States
Treasury Notes with maturities next above and below such Designated Maturity
(calculated as provided below); such yields in each case to be determined by the
Calculation Agent by averaging (and rounding upward to the nearest whole
multiple of 1/100 of 1% per annum, if the average is not such a multiple), the
yields of the relevant United States Treasury Notes (rounded, if necessary, to
the nearest 1/100 of 1% with any figure of 1/200 of 1% or above rounded upward)
as quoted by two reputable dealers in United States Treasury Notes selected by
the Calculation Agent at approximately 11:00 A.M., New York time, on the date
any Premium Amount shall be
TRUST INDENTURE
21
payable and notified to the Indenture Trustee, the Owner Trustee and the
holders of the affected Series of Certificates; any weighted average yield
of Treasury Notes with two maturities is to be calculated by the
Calculation Agent in accordance with the following formula:
WAY - Y1 + (Y2 - Y1) (DM - X1)
---------------------
(X2 - X1)
Where:
WAY - Weighted Average Yield
DM - relevant Designated Maturity
Xl - whole integer in years closest to and less than DM which equals the
maturity of a United States Treasury Note then publicly traded.
X2 - whole integer in years closest to and greater than DM which equals
the maturity of a United States Treasury Note then publicly traded.
Y1 - yield, determined as provided above, of United States
Treasury Notes then most recently auctioned with maturities equal to
X1.
Y2 - yield, determined as provided above, of United States Treasury Notes
then moat recently auctioned with maturities equal to X2.
SECTION 1.02. Other Definitions. For all purposes of this
-----------------
Indenture, terms defined in the heading and recitals of this Indenture are used
as so defined and capitalized terms used but not defined in this Indenture are
used as defined in the Leases.
ARTICLE II
THE CERTIFICATES
SECTION 2.01. Form of Certificates. The Certificates and the
--------------------
Indenture Trustee's form of certificate of authentication to appear on the
Certificates shall each be substantially in the form set forth below, as
follows:
TRUST INDENTURE
22
__________
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
not in its individual capacity, except as otherwise expressly
provided in the Operative Agreements, but solely as Owner Trustee
under Trust Agreement .
(Southwest Airlines 1990 Trust II, III & IV)
dated as of December 30, 1991
SERIES * LOAN
CERTIFICATE DUE 1992-1999
ISSUED IN CONNECTION WITH THREE BOEING MODEL 737-2H4
AIRCRAFT WITH MANUFACTURER'S SERIAL NUMBERS 21593, 21721 AND
21722 AND INITIALLY BEARING UNITED STATES FEDERAL AVIATION
ADMINISTRATION REGISTRATION NOS. N55SW, N56SW AND N57SW AND
SIX PRATT & WHITNEY JT8D-9A ENGINES
No. R-*- New York, New York
$ December 31, 1991
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not
in its individual capacity, except as otherwise expressly provided in the
Operative Agreements, but solely as Owner Trustee (herein in such capacity
called the "Owner Trustee") under that certain Trust Agreement (Southwest
-------------
Airlines 1990 Trust II, III & IV) dated as of December 30, 1991, between the
Owner Participant named therein and First Security Bank of Utah, National
Association (herein as such Trust Agreement may be amended or supplemented from
time to time called the "Trust Agreement"), hereby promises to pay to
---------------
___________________________________, or registered transferees, the principal
sum of_____________________________________________ Dollars, in sixty-four (64)
installments, one such installment to be due and payable on each Payment Date
specified, and each such installment to be in an amount equal to the amount set
forth, in Annex A hereto, together with interest on the unpaid principal amount
hereof from time to time outstanding from and including the date hereof until
such principal amount is paid in full. Interest shall accrue at the Interest
Rate and shall be payable
__________________
* Insert Series Letter
TRUST INDENTURE
23
in arrears on each Interest Payment Date and on the date this Certificate is
paid in full. The Certificate shall bear interest at the applicable Past Due
Rate on any principal hereof, interest and other amounts due hereunder not paid
when due (whether at stated maturity, by acceleration or otherwise) for any
period during which the same shall be overdue, payable on demand by the holder
hereof given through the Indenture Trustee.
Interest shall be calculated on the basis of a year of 360 days and
actual days elapsed. If any sum payable hereunder falls due on a day which is
not a Business Day, then such sum shall be payable on the next succeeding
Business Day. without (so long as payment is made on such succeeding Business
Day) additional interest as a result of such extension.
All payments of principal [, Premium Amount]' and interest and other
amounts to be made to the holder hereof or under the Amendment and Restatement
dated as of August 25, 1995 of Trust Indenture and Security Agreement (Southwest
Airlines 1990 Trust II, III & IV) dated as of December 30, 1991 (as amended or
supplemented from time to time, herein called the "Indenture" the terms defined
---------
therein and not otherwise defined herein being used herein with the same
meanings) between the Owner Trustee and Meridian Trust company, as Indenture
Trustee thereunder, shall be made only from the income and proceeds from the
Indenture Estate and the Collateral and (except in the case of the Collateral)
only to the extent that the Owner Trustee shall have sufficient income or
proceeds from the Indenture Estate to enable the Indenture Trustee to make such
payments in accordance with the terms of the Indenture. Each holder hereof, by
its acceptance of this Certificate, agrees that it will look solely to the
income and proceeds from the Indenture Estate and the collateral to the extent
available for distribution to the holder hereof as above provided and that none
of the Owner Participant, The Bank or the Indenture Trustee is personally liable
to the holder hereof for any amounts payable or any liability under this
Certificate or under the Indenture, except as expressly provided in the
Indenture (in the case of The Bank and the Indenture Trustee) or as expressly
provided in any Participation Agreement and the Special Participation Agreement
(in the case of The Bank, the Indenture Trustee and the Owner Participant)*
____________________
* Insert only in Series A Certificates
TRUST INDENTURE
24
[If the Owner Trustee elects or is required to prepay this Certificate
under any provision of the Indenture or any Person entitled thereto elects to
purchase this Certificate under Section 2.13 of the Indenture and such
prepayment or purchase or payment, as the case may be, is not consummated on the
date originally scheduled therefor, or if any payment of principal of or
interest on this Certificate is made on a date other than the date scheduled
therefor, the Owner Trustee or other such Person, as the case may be, shall, no
later than three Business Days after its receipt of demand by the holder hereof
(accompanied by a certificate of the type specified in the next succeeding
sentence) , given through the Indenture Trustee with a copy to the Lessee, pay
to the Indenture Trustee for the account of the holder hereof any amounts
required to compensate the holder hereof for any losses, costs or expenses which
it may incur as a result of the failure of such prepayment or purchase or
payment, as the case may be, to occur as scheduled. In connection therewith, the
holder hereof shall furnish to the Owner Trustee or other such Person, as the
case may be, a certificate setting forth, in reasonable detail, the calculation
of the amount of such losses, costs and expenses, which certificate shall be
conclusive absent manifest error.]*
Principal and interest and other amounts due hereon shall be payable
in Dollars in immediately available funds prior to Noon, New York time, on the
due date thereof, to the Indenture Trustee at the Corporate Trust Office and the
Indenture Trustee shall, subject to the terms and conditions of the Indenture,
remit all such amounts so received by it to the holder hereof at such account or
accounts at such financial institution or institutions as the holder hereof
shall have designated to the Indenture Trustee in writing, in immediately
available funds, such payment to be made prior to 2:00 P.M., New York time, on
the due date thereof. If such amounts are received after Noon, New York time on
the due date thereof, such amounts shall be deemed received on the next
following Business Day, and the Indenture Trustee shall make payment thereof
promptly, but not later than 11:00 A.M., New York time the next following
Business Day. In the event the Indenture Trustee shall fail to make any such
payment as provided in the two preceding sentences after its receipt of funds at
the place and prior to the time specified
________________
* Include only in Series A Certificates.
TRUST INDENTURE
25
above, the Indenture Trustee, in its individual capacity and not as trustee,
agrees to compensate the holder hereof for loss of use of funds in a
commercially reasonable manner if it shall have failed to use ordinary care in
the disbursing of such funds. All such payments by the Owner Trustee and the
Indenture Trustee shall be made free and clear of and without reduction for or
on account of any wire or other like charge.
Each holder hereof, by its acceptance of this Certificate, agrees
that, except as otherwise expressly provided in the Indenture, each payment
received by it in respect hereof shall be applied, first, to the payment of any
-----
amount (other than the principal of (or Premium Amount] or interest on this
Certificate) due in respect of this Certificate, second, to the payment of
------
(Premium Amount, if any, and]" interest hereon (as well as any interest on
overdue principal and, to the extent permitted by law, interest and other
amounts payable hereunder) due and payable hereunder, third, to the payment of
-----
the principal of this Certificate then due and fourth, the balance, if any,
------
remaining thereafter, to the payment of the principal of this Certificate
remaining unpaid, in the manner set forth in the last sentence of Section 2.06
of the Indenture.
This Certificate is one of the Certificates referred to in the
Indenture which have been or are to be issued by the Owner Trustee pursuant to
the terms of the Indenture. The Indenture Estate is held by the Indenture
Trustee as security, in part, for the Certificates. The beneficial interest of
the Owner Participant in and to the properties of the Owner Trustee pledged or
mortgaged as part of the Indenture Estate is subject and subordinate to the lien
and security interest granted to the Indenture Trustee to the extent provided in
the Indenture. Reference is hereby made to the Indenture and the Special
Participation Agreement referred to therein for a statement of the rights and
obligations of the holder hereof, and the nature and extent of the security for
this Certificate and of the rights and obligations of the other Certificate
Holders, and the nature and extent of the security for the other Certificates,
as well as for a statement of the terms and conditions of the trusts created by
the Indenture, to all of which terms and conditions in the Indenture and the
Special Participation Agreement each holder hereof agrees by its acceptance of
this Certificate.
____________________
* Include only in Series A Certificate.
TRUST INDENTURE
26
[WITHOUT LIMITING THE GENERALITY OF THE FOREGOING. THE HOLDER HEREOF
EXPRESSLY UNDERSTANDS AND AGREES THAT THIS CERTIFICATE IS SUBORDINATE AND JUNIOR
IN RIGHT OF PAYMENT TO THE SERIES A CERTIFICATES AND CERTAIN OTHER SUMS OWING TO
THE HOLDERS THEREOF TO THE EXTENT AND IN THE MANNER SET FORTH IN THE INDENTURE
.]*
There shall be maintained a Certificate Register for the purpose of
registering transfers and exchanges of Certificates at the Corporate Trust
Office of the Indenture Trustee or at the office of any successor indenture
trustee in the manner provided in Section 2.08 of the Indenture. As provided in
the Indenture, this Certificate or any interest herein may, subject to the next
following paragraph, be assigned or transferred, and the Certificates are
exchangeable for a like aggregate original principal amount of Certificates of
the same Series of any authorized denomination, as requested by the Certificate
Holder surrendering the same.
Prior to the due presentment for registration of transfer of this
Certificate, the Owner Trustee and the Indenture Trustee may deem and treat the
person in whose name this Certificate is registered on the Certificate Register
as the absolute owner of this Certificate and the Certificate Holder for the
purpose of receiving payment of all amounts payable with respect to this
Certificate and for all other purposes whether or not this Certificate is
overdue, and neither the Owner Trustee nor the Indenture Trustee shall be
affected by notice to the contrary.
This Certificate is subject to prepayment only as permitted by
Sections 2.11 and 2.12 of the Indenture and to purchase without consent of the
holder hereof only as provided in Section 2.13 of the Indenture, and the holder
hereof, by its acceptance of this Certificate, agrees to be bound by said
provisions.
This Certificate 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 signatories on the certificate below.
_________________________
* Include only in Series B Certificates.
TRUST INDENTURE
27
This Certificate shall be governed by and construed in accordance with
the law of the State of New York.
TRUST INDENTURE
28
IN WITNESS WHEREOF, the Owner Trustee has caused this Certificate to
be executed in its corporate name by its officer thereunto duly authorized, as
of the date hereof.
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
not in its individual capacity, but solely as
Owner Trustee
By _____________________________________
Title:
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred to in the within-mentioned
Indenture .
MERIDIAN TRUST COMPANY,
not in its individual capacity, but solely as
Indenture Trustee
By _____________________________________
Authorized Signatory
TRUST INDENTURE
29
Annex A to Series __ Certificate*
SCHEDULE OF PRINCIPAL PAYMENTS
Payment Date Principal
(Interest Payment Amount to
Date closest to) be Paid**
---------------- ---------
____________________
* Insert Series Letter.
** The amounts in this column for a Certificate of any Series shall be equal,
for any Payment Date, to the product of (a) the "Principal Amount to be
Paid" for such Payment Date as set forth in Annex I or Annex II, as the
case may be, and (b) a fraction, the numerator of which is the original
principal amount of such Certificate and the denominator of which is
aggregate original principal amount of such Series of Certificates.
TRUST INDENTURE
30
SECTION 2.02. Terms of Certificates. (a) On the Closing Date the
---------------------
Owner Trustee shall issue loan certificates in two series in an aggregate
original principal amount of $31,692,164.38: one series shall be designated
"Series A Loan Certificates", shall be in an aggregate original principal amount
of $19,683,472.13 and shall be issued to the Loan Participants designated as
receiving same pursuant to Section 1.1 (a) (ii) of the special participation
agreement (or their nominees) in such amounts as shall be set forth in said
Section 1.1 (a) (ii); and a second series shall be designated "Series B Loan
Certificates", shall be in an aggregate original principal amount of
$12,008,692.25 and shall be issued to the loan participants designated as
receiving same pursuant to Section 1.1(a) (ii) of the Special Participation
Agreement (or their nominees) in such amounts as shall be set forth in said
Section 1.1(a) (ii).
(b) The principal of the Certificates shall be due and payable on each
Payment Date as follows:
(1) with respect to the Series A Certificates in sixty-four (64)
consecutive installments as provided in Annex I; and
(2) With respect to the Series B Certificates in sixty-four (64)
consecutive installments as provided in Annex ii.
(c) Each Certificate shall bear interest on the unpaid principal
amount thereof from time to time outstanding from and including the date thereof
until such principal amount is paid in full. Such interest on each Certificate
shall accrue at the Interest Rate and shall be payable in arrears on each
Interest Payment Date and on the date such Certificate is paid in full. Interest
hereunder and under the Certificates shall be calculated on the basis of a year
of 360 days and actual days elapsed. If any sum payable under the Certificates
or under this Indenture falls due on a day which is not a Business Day, then
such sum shall be payable on the next succeeding Business Day, without (so long
as payment is made on such succeeding Business Day) additional interest as a
result of such extension. Each Certificate shall bear interest at the
applicable past due rate on any principal thereof and interest and other amounts
due
TRUST INDENTURE
31
thereunder and hereunder not paid when due (whether at stated maturity, by
acceleration or otherwise) for any period during which the same shall be
overdue, payable on demand by the respective Certificate Holder given through
the Indenture Trustee.
(d) The Certificates shall be executed on behalf of the Owner Trustee
by one of its authorized officers. Certificates bearing the signatures of
individuals who were at any time the proper officers of the Owner Trustee shall
bind the Owner Trustee, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the authentication and delivery of
such Certificates or did not hold such offices at the respective dates of such
Certificates. No Certificates shall be issued hereunder except those provided
for in Section 2.02(a) and any Certificates issued in exchange or replacement
therefor pursuant to the terms of this Indenture. Each Certificate issued under
this Section 2.02 shall be dated the Closing Date. No Certificate shall be
secured by or entitled to any benefit under this Indenture or be valid or
obligatory for any purpose, unless there appears on such Certificate a
certificate of authentication in the form provided for herein executed by the
Indenture Trustee by the manual signature of one of its authorized officers and
such certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder.
SECTION 2.03. Taxes. (a) The Owner Trustee agrees to pay, and to
-----
indemnify and hold each Loan Participant and its respective successors, assigns,
employees, agents and servants (each being hereinafter referred to as an
"Indemnitee") harmless from and against, all Taxes (including Taxes payable by
----------
reason of any payment under this Section 2.03), imposed upon any Indemnitee upon
or with respect to or measured by or resulting from this Indenture, any other
Operative Agreement or any Certificate, or any principal, interest or other
payment made or payable by the Owner Trustee hereunder or thereunder. The
Indenture Trustee agrees, to the extent required by applicable law, to withhold
from each payment due hereunder or under any Certificate to a Non-U.S. Person
United States federal withholding taxes at the appropriate rate, and, on a
timely basis, to deposit such amounts with an authorized depository and make
such reports, filings and other reports in connection therewith, and in the
manner, required under applicable law. The Indenture Trustee shall promptly (but
in no event later than the date 30 days after the
TRUST INDENTURE
32
due date of the relevant payment) furnish to each Certificate Holder with
respect to whom taxes have been withheld a U.S. Treasury Form 1042S and Form
8109-B (or similar forms as at any relevant time in effect), if applicable,
indicating payment in full of any Taxes withheld from any payments by the
Indenture Trustee to such Certificate Holder together with all such other
information and documents reasonably requested by such Certificate Holder and
necessary or appropriate to enable such Person to substantiate a claim for
credit or deduction with respect thereto for income tax purposes of any
jurisdiction with respect to which such Person is required to file a tax return;
provided that each Certificate Holder which is a Non-U.S. Person has furnished
- --------
to the Indenture Trustee a properly completed and currently effective U.S.
Treasury Form 1001 (or such successor form as may be required by the United
States Treasury department) during the calendar year in which the payment is
made, or in either of the two preceding calendar years, and has not notified the
Indenture Trustee of the withdrawal of such Form prior to the date of each
interest payment, only the reduced amount required by applicable law shall be
withheld from payments under the Certificates held by such Certificate Holder in
respect of United States federal income tax; provided, further, that each
-------- -------
Certificate Holder which is a Non-U.S. Person has furnished to the Indenture
Trustee a properly completed and currently effective (1) certificate in
substantially the form of Exhibit B hereto and a U.S. Treasury Form W-8 or (2) a
U.S. Treasury Form 4224, as the case may be (or such successor certificate or
Forms as may be required by the United States Treasury department as necessary
to avoid withholding of United States federal income tax) during the calendar
year in which the payment is made, or in the case of a Form W-8 in either of the
two preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal of such certificate and/or Form prior to the date of each interest
payment, no amount shall be withheld from payments under the Certificates held
by such Certificate Holder in respect of United States federal income tax. Each
Certificate Holder shall indemnify and hold harmless the Indenture Trustee
against any claim for United States withholding taxes which the Indenture
Trustee improperly fails to withhold on payments to such Certificate Holder as a
direct result of the invalidity of any certificate or Form provided by such
Certificate Holder pursuant to this Section 2.03 or the failure of the
Certificate Holder to notify the Indenture Trustee that a previously furnished
form has become incorrect.
TRUST INDENTURE
33
(b) If at any time while the Certificates shall be outstanding any
applicable law or tax treaty of the United States or in any interpretation or
administration thereof by any judicial or governmental authority of the United
States subjects any Certificate Holder to any tax collected by withholding
imposed by the United States government on interest due under the Certificates
(other than interest attributable to a United States permanent establishment of
Certificate Holder), then, within 30 days after written demand by such
Certificate Holder, the Owner Trustee shall indemnify and hold harmless such
Certificate Holder from and against all withholding taxes referred to above,
including the payment of any amount necessary to hold such Certificate Holder
harmless on an after-tax basis from all taxes required to be paid with respect
to such payment or indemnity under the laws of any taxing authority in any
applicable jurisdiction; provided that the Owner Trustee shall not be under such
--------
obligation to indemnify and hold harmless such Certificate Holder to the extent
that the obligations of the Owner Trustee under this paragraph 2.03(b) were
increased upon, and at the time of, the transfer of the relevant Certificate to
such Certificate Holder (and would not have increased but for such transfer).
Each holder of a Certificate agrees that it will promptly, and in any event
within 30 Business Days, after having actual knowledge thereof use reasonable
efforts to notify the Owner Trustee of any event or events which will subject
such Certificate Holder to any tax collected by withholding described herein and
each such Certificate Holder agrees that it will promptly deliver or cause to be
delivered a certificate of a responsible officer of such Certificate Holder
setting forth the applicable law or the administration or interpretation thereof
that is the basis for the withholding tax (including the computation thereof).
All determinations, estimates, assumptions, allocations and the like required
for the determination of the amount required to be paid to a Certificate Holder
pursuant to this paragraph in order to hold such Certificate Holder harmless on
an after-tax basis from the withholding taxes referred to above shall be made in
good faith by the Certificate Holder.
SECTION 2.04. Payments from Indenture Estate and Collateral Only.
----------------------------------------------------
Except as otherwise expressly provided in the next succeeding sentence of this
Section 2.04, all payments to be made by the Owner Trustee under this Indenture
shall be made only from the income and the proceeds from the Indenture Estate
and only to the extent that the Owner Trustee shall have sufficient income or
proceeds from the Indenture Estate to enable the
TRUST INDENTURE
34
Indenture Trustee to make payments in accordance with the terms hereof. Each
Certificate Holder, by its acceptance of a Certificate, and the Indenture
Trustee, each agrees that it will look solely to the income and proceeds from
the Indenture Estate and Collateral to the extent available for distribution to
it as above provided and that none of the Owner Participant, The Bank or the
Indenture Trustee is personally liable to it for any amounts payable or any
liability under any Certificate or this Indenture, except (in the case of the
Indenture Trustee and The Bank) as expressly provided herein (in the case of The
Bank, the Indenture Trustee or the Owner Participant), as expressly provided in
any Participation Agreement and the Special Participation Agreement or (in the
case of the Guarantors of the Series B Certificates) as expressly provided in
the Guarantee.
SECTION 2.05. Method of Payment. Principal and interest and other
-----------------
amounts due hereunder or under the Certificates or in respect hereof or thereof
shall be payable in Dollars in immediately available funds prior to Noon, New
York time, on the due date thereof, to the Indenture Trustee at the Corporate
Trust Office and the Indenture Trustee shall, subject to the terms and
conditions hereof, remit all such amounts so received by it to the Certificate
Holders at such account or accounts at such financial institution or
institutions as the Certificate Holders shall have designated to the Indenture
Trustee in writing, in immediately available funds for distribution to the
relevant Certificate Holders, such payment to be made prior to 2:00 P.M., New
York time on the due date thereof. If such amounts are received after Noon, New
York time on the due date thereof, such amounts shall be deemed received on the
next following Business Day, and the Indenture Trustee shall make payment
thereof promptly, but not later than 11:00 A.M., New York time the next
following Business Day. In the event the Indenture Trustee shall fail to make
any such payment as provided in the two preceding sentences after its receipt of
funds at the place and prior to the time specified above, the Indenture Trustee,
in its individual capacity and not as trustee, agrees to compensate the
Certificate Holders for loss of use of funds in a commercially reasonable manner
if it shall have failed to use ordinary care in the disbursing of such funds.
The Owner Trustee and the Indenture Trustee acknowledge that the payment
instructions given in Schedule II to the Special Participation Agreement
constitute the initial written notice required by the first sentence of this
Section 2.05 to make all payments as provided in such Schedule. All such
payments by the Owner
TRUST INDENTURE
35
Trustee and the Indenture Trustee shall be made free and clear of and without
reduction for or on account of any wire and other like charge. Prior to the due
presentment for registration of transfer of any Certificate, the Owner Trustee
and the Indenture Trustee may deem and treat the Person in whose name any
Certificate is registered on the Certificate Register as the absolute owner of
such Certificate for the purpose of receiving payment of all amounts payable
with respect to such Certificate and for all other purposes whether or not such
Certificate shall be overdue, and neither the Owner Trustee nor the Indenture
Trustee shall be affected by any notice to the contrary.
SECTION 2.06. Application of Payments. Each payment of principal and
-----------------------
interest or other amounts due in respect of each Certificate shall, except as
otherwise expressly provided herein, be applied, first, to the payment of any
-----
amount (other than the principal of or Premium Amount (if any) or interest on
such Certificate) due in respect of such Certificate, second, to the payment of
------
Premium Amount (if any), if any, and interest on such Certificate (as well as
any interest on overdue principal and interest and other amounts payable
thereunder) due thereunder, third, to the payment of the principal of such
-----
Certificate then due and fourth, the balance, if any, remaining thereafter, to
------
the payment of the principal of such Certificate remaining unpaid (provided that
such Certificate shall not be subject to prepayment or purchase without the
consent of the affected Certificate Holder except as permitted by Section 2.11).
The amounts paid pursuant to clause fourth above shall be applied to the
------
installments of principal of such Certificate in inverse order of maturity.
SECTION 2.07. Termination of Interest in Indenture Estate. A
-------------------------------------------
Certificate Holder shall not, as such, have any further interest in, or other
right with respect to, the Indenture Estate when and if the principal amount of
and Premium Amount, if any, and interest on and other amounts due under all
Certificates held by such holder and all other sums due to such Certificate
Holder hereunder and under the other Operative Agreements shall have been paid
in full.
SECTION 2.08. Registration. Transfer and Exchange of Certificates.
-----------------------------------------------------
The Indenture Trustee agrees with the Owner Trustee that the Indenture Trustee
shall keep a register (herein sometimes referred to as the "Certificate
-----------
Register") in which provisions shall be made for the registration of
- --------
Certificates and
TRUST INDENTURE
36
the registration of transfers of Certificates. The Certificate Register shall be
kept at the Corporate Trust Office of the Indenture Trustee or at the office of
any successor indenture trustee, and the Indenture Trustee is hereby appointed
"Certificate Registrar" for the purpose of registering Certificates and
transfers of Certificates as herein provided. Upon surrender for registration of
transfer of any Certificate at the Corporate Trust Office, the Owner Trustee
shall execute, and the Indenture Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of the same Series dated the Closing Date and of a like aggregate principal
amount. At the option of the Certificate Holder, its Certificates may be
exchanged for other Certificates of the same Series and of any authorized
denominations, of a like aggregate principal amount, upon surrender of the
Certificates to be exchanged at the Corporate Trust Office. Each new Certificate
issued upon transfer or exchange shall be in a principal amount of at least
$500,000 (except as may be necessary to evidence the entire outstanding
principal amount of a Certificate). Whenever any Certificates are so surrendered
for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall
authenticate and deliver, the Certificates of the relevant Series which the
Certificate Holder making the exchange is entitled to receive. All Certificates
issued upon any registration of transfer or exchange of Certificates shall be
the valid obligations of the Owner Trustee evidencing the same respective
obligations, and entitled to the same security and benefits under this
Indenture, as the Certificates surrendered upon such registration of transfer or
exchange. Every Certificate presented or surrendered for registration of
transfer or exchange, shall (if so required by the Indenture Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by the Certificate Holder
thereof or his 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 shall make a notation on
each new Certificate or Certificates of the amount of all payments of principal
previously made on the old Certificate or Certificates with respect to which
such new Certificate is issued and the date to which interest accrued on such
old Certificate or Certificates has been paid. The Indenture Trustee shall not
be required to register the transfer of or exchange any surrendered Certificates
as above provided during the five calendar day period preceding
TRUST INDENTURE
37
the due date of any payment on such Certificates. Any Certificate Holder may
transfer any or all of its Certificates to any Person other than the Lessee or
its Affiliates. The Owner Trustee and the Indenture Trustee shall treat the
Person in whose name each Certificate is registered on the Certificate Register
as the Certificate Holder with respect thereto for all purposes hereof until due
presentment for registration of transfer as provided in this Section 2.08. The
Indenture Trustee shall give the Lessee and each Certificate Holder notice of
such transfer of a Certificate under this Section 2.08.
SECTION 2.09. Mutilated, Destroyed, Lost or Stolen Certificates. If
-------------------------------------------------
any Certificate shall become mutilated, destroyed, lost or stolen, the Owner
Trustee shall, upon the written request of the affected Certificate Holder,
execute, and the Indenture Trustee shall authenticate and deliver in replacement
thereof, a new Certificate, of the same series as such Certificate, in the same
principal amount, dated the date of such Certificate and designated as issued
under this Indenture. If the Certificate being replaced has become mutilated,
such Certificate shall be surrendered to the Indenture Trustee and a photocopy
thereof shall be furnished to the Owner Trustee by the Indenture Trustee. If the
Certificate being replaced has been destroyed, lost or stolen, the affected
Certificate Holder shall furnish to the Owner Trustee and the Indenture Trustee
such security or indemnity as may be reasonably required by them to hold the
Owner Trustee and the Indenture Trustee harmless and evidence satisfactory to
the Owner Trustee and the Indenture Trustee of the destruction, loss or theft of
such Certificate and of the ownership thereof; provided, however, that if the
-------- -------
affected Certificate Holder is an original party to the Special Participation
Agreement or an Affiliate thereof, the written notice of such destruction, loss
or theft and such ownership and the written undertaking of such Certificate
Holder delivered to the Owner Trustee and the Indenture Trustee to hold harmless
the Owner Trustee and the Indenture Trustee in respect of the execution,
authentication and delivery of such new Certificate shall be sufficient
evidence, security and indemnity.
SECTION 2.10. Payment of Expenses on Transfer. Upon the issuance of
-------------------------------
a new Certificate or new Certificates pursuant to Section 2.08 or 2.09, the
Owner Trustee and/or the Indenture Trustee may require from the party requesting
such new Certificate or Certificates payment of a sum sufficient to reimburse
the Owner Trustee and/or the Indenture Trustee for, or
TRUST INDENTURE
38
to provide funds for, the payment of any tax or other governmental charge in
connection therewith or any charges and expenses connected with such tax or
other governmental charge paid or payable by the Owner Trustee or the Indenture
Trustee.
SECTION 2.11. Prepayment. (a) The Owner Trustee may prepay in whole
----------
or in part, the Certificates of any Series then outstanding at the principal
amount thereof, together with accrued interest thereon to the date of prepayment
plus all Premium Amount and all other amounts due to the holders of the
Certificates hereunder, thereunder and under the other Operative Agreements,
but, in the case of any prepayment of a Series A Certificate, the Swap Upside in
respect of such Certificate. No Series B Certificate may be prepaid pursuant to
this Section 2.11(a) prior to the date all of the Series A Certificates shall
have been duly prepaid in full as provided in the preceding sentence.
(b) The Certificates shall be prepaid in full or (to the extent of
available proceeds pursuant to Section 3.02(a)) in part, together with accrued
interest thereon to the date of prepayment and all other amounts due thereunder
and hereunder and under the other Operative Agreements to the Certificate
Holders (i) upon the occurrence of an Event of Loss with respect to any Airframe
or any Aircraft, on the earlier of the date of the Lessee's payment with respect
to such Event of Loss in Section 10.1 of the Lease to which such Airframe or
Aircraft is/was subject or the last day permitted for such payment under said
Section 10.1 or (ii) upon or prior to the sale or other disposition of any of
the Aircraft by the Indenture Trustee at the direction of the Owner Participant.
The Owner Trustee will give notice of prepayment under this Section 2.11(b)
promptly after receipt of the Lessee's notice of payment under Section 10.1 of
any Lease or in connection with the sale or other disposition of any of the
Aircraft pursuant to clause (ii) above. Any such notice shall be irrevocable.
Any prepayment of the Series A Certificates pursuant to this Section 2.11(b)
shall be accompanied by the Premium Amount for each holder of a series A
Certificate.
SECTION 2.12. Provisions Relating to Prepayment. (a) The Owner
----------------------------------
Trustee shall have no right to prepay the principal amount of the Certificates,
in whole or in part, except as permitted by Section 2.11. Any such prepayment
effected pursuant to Section 2.11(a) shall be made by the Owner Trustee only on
a date coincident with an Interest Payment Date and upon at least 60 calendar
days' prior irrevocable written notice to the Indenture Trustee and the
Certificate Holders. Notice of prepayment having been given as aforesaid, the
principal amount
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of the Certificates so to be prepaid, plus accrued interest thereon to the date
of prepayment, together with the Premium Amount, if any, herein provided, shall
become due and payable on the prepayment date.
(b) On the date fixed for prepayment under Section 2.11, immediately
available funds in Dollars shall be deposited by the Owner Trustee in the
account of the Indenture Trustee at the place and by the time and otherwise in
the manner provided in Section 2.05, in an amount equal to the principal amount
of Certificates to be prepaid together with accrued and unpaid interest thereon
to the date fixed for such prepayment, all Premium Amount, if any, thereon and
all other amounts due to the holders of the Certificates subject to prepayment
hereunder, thereunder and under the other Operative Agreements, but, in the case
of a prepayment pursuant to Section 2.11(a) of any Series A Certificate, net of
the Swap Upside in respect of such Certificate.
SECTION 2.13. Purchase Option. (a) By Owner Participant. At any
---------------- --------------------
time while either (x) a Lease Event of Default has occurred and has been
continuing for a period of 180 days during which the Certificate Holders or the
Indenture Trustee shall not have been stayed or otherwise precluded by operation
of law from taking action to accelerate the Certificates or to exercise remedies
hereunder or under any Lease, or (y) the Certificates shall have become due and
payable as provided in Section 4.04(b) or 4.04(c), and, provided in either case
that no Indenture Default which is not a Lease Default shall have occurred and
be continuing, the Owner Participant may at any time within 60 days thereafter
elect to purchase all, but not less than all, Certificates then outstanding.
Upon receipt of written notice of such election from the Owner Participant,
which notice in order to be effective shall state that it is irrevocable and
shall designate a date not more than fourteen calendar days thereafter as the
purchase date, each Certificate Holder agrees that it will, upon payment to it
in the manner provided for in Section 2.05 from the Owner Participant of an
amount equal to the aggregate unpaid principal amount of all Certificates then
held by such Certificate Holder, together with accrued and unpaid interest
thereon to the date of payment, the Premium Amount, if any, for such Certificate
Holder and all other sums then due and payable to such Certificate Holder
hereunder, under such Certificates and the other Operative Agreements, forthwith
sell, assign, transfer and convey to the purchaser (without recourse,
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representation or warranty of any kind except for its own acts), all of the
right, title and interest of such Certificate Holder in and to the Indenture
Estate, the Collateral, this Indenture, all Certificates held by such
Certificate Holder and the other Operative Agreements (excluding all right,
title and interest under any of the foregoing to the extent such right, title or
interest is with respect to an obligation not then due and payable or past due
(other than any claims in respect of past due interest to the extent included in
the purchase price of the Certificates), with respect to any action or inaction
or state of affairs occurring prior to such sale) and the purchaser shall assume
all of such Certificate Holder's obligations under the other Operative
Agreements and this Indenture. If the purchaser shall so request, such
Certificate Holder will comply with all the provisions of Section 2.08 (other
than those relating to Securities Act compliance) to enable new Certificates of
like Series to be issued to the purchaser in such denominations as the purchaser
shall request. In the case of any such purchase, the purchaser shall furnish to
the Certificate Holders an opinion of counsel of the purchaser satisfactory to
the Certificate Holders that such transfer and conveyance are exempt from
registration under the Securities Act and do not violate any registration
provision of any applicable state securities laws. All charges and expenses
required pursuant to Section 2.10 in connection with the issuance of any such
new Certificate pursuant to this Section shall be borne by the purchaser.
(b) Holders of Series B Certificates. At any time while the Owner
--------------------------------
Participant would be entitled to purchase all Certificates under Section
2.13(a), any holder of a Series B Certificate may, whether or not the Owner
Participant shall have elected pursuant to Section 2.13 (a) to purchase all
Certificates then outstanding, by written notice to the Indenture Trustee, the
Owner Participant and the holders of the Series A Certificates, elect to
purchase all, but not less than all, Series A Certificates then outstanding on
the date specified in such written notice (which shall (x) not be earlier than
the Business Day next following the date of purchase which shall have been
specified in any notice theretofore given by the Owner Participant pursuant to
Section 2.13(a) and (y) not be more than seven days after the date of such
notice from such holder of a Series B Certificate, which notice, in order to be
effective, shall state that it is irrevocable unless all Certificates are
purchased pursuant to Section 2.13 (a) in which event such notice shall be
deemed to have been automatically revoked upon the consummation
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of any such purchase pursuant to Section 2.13(a). Each holder of a Series A
Certificate agrees by its acceptance thereof that it will (unless the Owner
Participant shall have elected pursuant to Section 2.13(a) to purchase the
Certificates then outstanding and shall not, following such election, have
failed to consummate such purchase), upon payment to it in the manner provided
for in Section 2.05 from such holder of a Series B Certificate of an amount
equal to the aggregate unpaid principal amount of all Series A Certificates then
held by such Certificate Holder, together with accrued and unpaid interest
thereon to the date of payment and the Premium Amount (other than the Special
Premium) for such Certificate Holder and all other sums then due and payable to
such holder hereunder, under its Certificates and under the other Operative
Agreements, but net of the Swap Upside (as defined in Exhibit E) for such
holder, forthwith sell, assign, transfer and convey to the purchaser thereof
(without recourse, representation or warranty of any kind except for its own
acts), all of the right, title and interest of such Certificate Holder in and to
the Indenture Estate, the Collateral, this Indenture, all Certificates held by
such Certificate Holder and the other Operative Agreements (excluding all right,
title and interest under any of the foregoing to the extent such right, title or
interest is with respect to an obligation not then due and payable or past due
(other than any claims in respect of past due interest to the extent included in
the purchase price of the Series A Certificates), with respect to any action or
inaction or state of affairs occurring prior to such sale) and the purchaser
shall assume all of such Certificate Holder's obligations under the other
Operative Agreements and this Indenture. If the purchaser shall so request, such
Certificate Holder will comply with all the provisions of Section 2.08 (other
than those relating to Securities Act compliance) to enable new Certificates of
a like Series to be issued to the purchaser in such denominations as it shall
request. All charges and expenses in connection with the issuance of any such
new Series A Certificates shall be borne by the purchaser thereof. In the case
of such purchase, the purchaser shall, upon request, furnish to the holders of
the Series A Certificates an opinion of counsel of the purchaser satisfactory to
such Series A Certificate holders (or other evidence reasonably satisfactory to
the Series A Certificate holders) that such transfer and conveyance are exempt
from registration under the Securities Act and do not violate any registration
provision of any applicable state securities laws. If more than one Series B
Certificate holder shall elect to purchase the Series A Certificates pursuant to
this Section
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2.13(b), then each Series B Certificate holder shall be entitled to purchase
from each Series A Certificate holder its pro-rata share of such Certificates so
held, which pro rata share shall be in the same proportion (as nearly as
practicable) as the original principal amount of the Series B Certificates held
by such Series B Certificate holder bears to the aggregate principal amount of
Series B Certificates held by all Series B Certificate holders which shall have
made such election; provided that no purchase of Series A Certificates pursuant
--------
to this Section 2.13(b) shall occur unless all Series A Certificates are so
purchased as provided in this Section 2.13(b).
SECTION 2.14. Yield Protection. (a) The Owner Trustee shall pay
----------------
directly to each holder of a Series A Certificate from time to time promptly
after demand therefor such amounts as such holder determines to be necessary to
compensate it for any costs which are attributable to its making of the loan
evidenced by, or its maintaining of, any Series A Certificate or the funding
arrangements in respect thereof (including, without limitation, any interest
rate swap transaction), or any reduction in any amount receivable by such holder
hereunder in respect of any thereof resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to such
holder under this Indenture, its Certificates or any of the other Operative
Agreements in respect of any of such Certificates or such funding
arrangements (other than taxes imposed on or measured by the overall net
income of such holder or of its Lending Office by the jurisdiction in which
such holder has its principal office or its Lending Office); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of, such holder; or
(iii) imposes any other condition affecting this Indenture, its
Certificates (or any funding arrangements in respect thereof) or the other
Operative Agreements.
(b) Without limiting the effect of the foregoing provisions of this
Section 2.14 (but without duplication), the Owner Trustee shall pay directly to
each holder of a Series A Certificate from time to time promptly after demand
therefor such
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amounts as such holder determines to be necessary to compensate such holder (or,
without duplication, the bank holding company of which such holder is a
subsidiary) for any costs which are attributable to the maintenance by such
holder (or its Lending Office or such bank holding company), pursuant to any
applicable law or regulation or any interpretation, directive or request
(whether or not having the force of law) of any court or governmental or
monetary authority following any Regulatory Change, of capital in respect of its
Certificates, or the funding arrangements in respect thereof (including, without
limitation, any interest rate swap transaction) (such compensation to include,
without limitation, an amount equal to any reduction of the rate of return on
assets or equity of such holder (or its Lending Office or such bank holding
company) to a level below that which such holder (or its Lending Office or such
bank holding company) could have achieved but for such Regulatory Change).
(c) Each holder of a Series A Certificate will notify the Owner
Trustee of any event occurring after the date of this Indenture that will
entitle such holder to compensation under paragraph (a) or (b) of this Section
2.14 as promptly as practicable, but in any event within 45 days, after such
holder obtains actual knowledge thereof; provided, however, that if any such
--------- --------
holder fails to give such notice within 45 days after it obtains actual
knowledge of such an event, such holder shall, with respect to compensation
payable pursuant to this Section 2.14 in respect of any costs resulting from
such event, only be entitled to payment under this Section 2.14 for costs
incurred from and after the date 45 days prior to the date that such holder does
give such notice; and provided, further, that each holder will designate a
-------- -------
different Lending Office for the Loan Certificates of such holder affected by
such event if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of such holder, be
disadvantageous to such holder. Each holder will furnish to the Owner Trustee a
certificate setting forth the basis and amount of each request by such holder
for compensation under paragraph (a) or (b) for purposes of this Section 2.14.
Determinations and allocations by any holder for purposes of this Section 2.14
of the effect of any Regulatory Change pursuant to Section 2.14(a) hereof, or of
the effect of capital maintained pursuant to Section 2.14(b) hereof, and of the
amounts required to compensate such holder under this Section 2.14, shall be
conclusive, provided that such determinations and allocations are made on a
reasonable basis.
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SECTION 2.15. (Intentionally omitted.)
SECTION 2.16. Certificates in Respect of Replacement Engines. Upon
----------------------------------------------
the execution and delivery of an Indenture Supplement covering a Replacement
Engine, as provided in Section 5.06, each Certificate shall be deemed to have
been issued in connection with such Replacement Engine and each Certificate
issued thereafter upon a transfer or exchange of, or as a replacement for, a
Certificate, shall be designated as having been issued in connection with such
Replacement Engine, but without any other change therein except as provided for
in this Article II.
SECTION 2.17. Terms of Subordination. Subject to Section 3.04(c),
----------------------
the Series B Certificates and all other sums payable to the holders thereof
under the Operative Agreements shall be subordinate and junior in right of
payment to the Series A Certificates and all other sums payable to the holders
thereof under the Operative Agreements to the extent and in the manner
hereinafter set forth:
(a) No payment or distribution shall be made on or in respect of the
principal of, interest (including, without limitation interest accruing
after the commencement of any proceeding of the type referred to in Section
4.02(g) or (h) or Section 14.5 of any Lease (for purposes of this Section
2.17, a "Case")) on, or any other amount payable in respect of, the Series
----
B Certificates, nor shall any payment or distribution be made on or in
respect of any indemnity or other claim or obligation owing to any holder
of a Series B Certificate under any Operative Agreements, in either case,
except directly to the Indenture Trustee for application as expressly
provided in Article III of this Indenture.
(b) In any Case, any payment or distribution of any kind or
character, whether in cash, property, stock or obligations which may be
payable or deliverable on or in respect of any Series B Certificate or
other sum owing to any holder of a Series B Certificate under the Operative
Agreements shall be paid or delivered directly to the Indenture Trustee for
distribution to the holders of the Series A Certificates as provided in
Article III. In the event that, notwithstanding the foregoing, any such
payment or distribution shall be received by the holder (other than from
the Indenture Trustee as provided in Article III) of
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any Series B Certificate before the amount of all principal of and interest on
all Series A Certificates (including, without limitation, interest accruing
after the commencement of a Case) and all other sums owing to the holders of the
Series A Certificates under the Operative Agreements is paid in full in cash, or
provision made for such payment, in accordance with its terms, such payment or
distribution shall be held in trust for and paid over or delivered to the
Indenture Trustee for distribution to the holders of the Series A Certificates
as provided in Article III.
(c) By acceptance of its Series B Certificate, each holder of a Series B
Certificate hereby irrevocably authorizes and empowers the holders of the Series
A Certificates, or the Indenture Trustee acting on their behalf, to demand, sue
for, collect and receive every payment or distribution made on or in respect of
the Series B Certificates or other sums owing to the holders thereof under the
Operative Agreements in any Case, and to file claims and take such other
proceedings, in the holders' of the Series A Certificates own name or in the
name of the holders of the Series B Certificates or otherwise, as the holders of
the Series A Certificates or the Indenture Trustee acting on their behalf may
deem necessary or advisable for the enforcement of the provisions hereof. By the
acceptance of its Series B Certificate, each holder of a Series B Certificate
agrees duly and promptly to take such action as may be requested by the holders
of the Series A Certificates or the Indenture Trustee acting on their behalf to
collect the indebtedness evidenced by its Series B Certificate owing to it or
otherwise owing to it under the Operative Agreements for the account of the
holders of the Series A Certificates and/or to file appropriate proofs of claim
in respect to such indebtedness, and to execute and deliver to the holders of
the Series A Certificates or the Indenture Trustee acting on their behalf on
demand such powers of attorney, proofs of claim, assignments of claim or proofs
of claim, or other instruments as may be requested by the holders of the Series
A Certificates or the Indenture Trustee acting on their behalf to enforce any
and all claims upon or with respect to its Series B Certificate owing to it or
otherwise owing to it under the Operative Agreements.
(d) Except as otherwise expressly provided in this Indenture, the holders
of the Series A Certificates or the
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Indenture Trustee acting on their behalf may, at any time and from time to time,
without the consent of or notice to the holders of the Series B Certificates,
without incurring responsibility to such holders and without impairing or
releasing any of the rights of the holders of the Series A Certificates, or any
of the obligations of the holders of the Series B Certificates hereunder:
(i) to the extent it is entitled to do so hereunder, sell, exchange,
release or otherwise deal with all or any part of any property by
whomsoever mortgaged or pledged to secure, or howsoever securing, the
Series A Certificates;
(ii) to the extent it is entitled to do so hereunder, exercise or
refrain from exercising any rights against the Owner Trustee or the Lessee
or any other Person; and
(iii) to the extent it is entitled to do so hereunder and the same are
applied in accordance with Article III, apply any sums, by whomsoever paid
or however realized, to the series a certificates.
(e) By the acceptance of its series B certificate, each holder of a series
B certificate agrees that in the event that such holder shall receive any
payment on its series B certificate or otherwise owing to it under the operative
agreements which it is not entitled to receive under this section 2.17 or
Article III, it will hold any amount so received in trust for the holders of the
Series A Certificates and will forthwith turn over such payment to the Indenture
Trustee on behalf of the holders of series A Certificates in the form received
to be applied as provided in Article III.
(f) By the acceptance of its Series B Certificate, each holder of a Series
B Certificate agrees that it may not commence any action or proceeding against
the Owner Trustee the Owner Participant, the Lessee or any other Person
obligated in respect of any Operative Agreements to recover all or any part of
the principal or interest on its Series B Certificate or any other sum owing to
it under any Operative Agreements or join with any creditor, unless the holders
of
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the Series A Certificates shall also join, in bringing any such action or
proceeding.
(g) By the acceptance of its Series B Certificate, each holder of a Series
B Certificate hereby irrevocably authorizes and empowers the Indenture Trustee
on behalf of the holders of the Series A Certificates to vote the full amount of
the indebtedness evidenced by its Series B Certificate owing to it or otherwise
owing to it under the Operative Agreements in any Case.
(h) No payment or distribution of assets to which the holders of the
Series B Certificates would have been entitled except for the provisions of this
Section 2.17 or Article III and which shall have been received by the holders of
the Series A Certificates shall, as between the obligor thereon, its creditors,
and the holder of the Series B Certificates, be deemed to be a payment by the
obligor to the holders of the Series A Certificates for or on account of the
Series A Certificates, and from and after the payment in full in cash of all
Series A Certificates and all other amounts owing to the holders thereof under
the Operative Agreements, the holders of the Series B Certificates shall be
subrogated to the then or thereafter existing rights of the holders of Series A
Certificates to receive payments or distributions of assets of the relevant
obligor made on or in respect of the Series A Certificates or such other amounts
until the principal of, and interest on, the Series B Certificates and all other
amounts owing to the holders thereof under the Operative Agreements shall be
paid in full, and no such payments or such other amounts or distributions to the
holders of the Series B Certificates of cash, property or securities, which
otherwise would be payable or distributable to the holders of the Series A
Certificates, shall, as between the obligor thereon, its creditors other than
the holders of the Series A Certificates, and the holder of the Series B
Certificates, be deemed to be a payment by the relevant obligor to the holder of
the Series B Certificates on account thereof.
(i) The provisions of this Section 2.17 and Article III are solely for the
purpose of defining the relative rights of the holders of Series A Certificates
on the one hand, and the holders of the Series B Certificates on the other hand,
and nothing herein shall, except as
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be applied forthwith to the purpose for which such payment was made in
accordance with the terms thereof.
(b) Except as otherwise provided in Section 3.01(b), Section 3.02(a),
3.02(b) or Section 3.03, the Indenture Trustee will distribute, promptly upon
receipt, any indemnity payment received by it from the Owner Trustee, The Bank,
the Lessee or the Owner Participant in respect of the Indenture Trustee in its
individual capacity or any Loan Participant or Certificate Holder either
pursuant to Section 8 of any Participation Agreement or as Supplemental Rent or
otherwise, directly to the Person entitled thereto.
(c) Notwithstanding anything to the contrary contained in this
Indenture, any sums received by the Indenture Trustee which constitute (i)
Excluded Payments shall be distributed promptly upon receipt by the Indenture
Trustee directly to the Person or Persons entitled thereto or (ii) Collateral
solely in respect of the Series B Certificates shall be applied, first, as
-----
provided in clause "fifth" of Section 3.03 (but only to the holders of the
-----
Series B Certificates), second, as provided in clause "sixth" of Section 3.03,
------ -----
third, as provided in clause "seventh" of Section 3.03 and fourth, as provided
- ----- -------
in clause "eighth" of Section 3.03.
------
SECTION 3.05. Other Payments. Any payments received by the Indenture
--------------
Trustee for which no provision as to the application thereof is made in this
Indenture shall be distributed by the Indenture Trustee (i) to the extent
received or realized at any time prior to the payment in full of all obligations
to the Certificate Holders secured by the Lien of this Indenture, in the order
of priority specified in Section 3.01, and (ii) to the extent received or
realized at any time after payment in full of all obligations to the Certificate
Holders secured by the Lien of this Indenture, in the following order of
priority: first, in the manner provided in the clause "first" of Section 3.03
----- -----
and second, in the manner provided in clause "tenth" of Section 3.03.
------ -----
SECTION 3.06. Payments to Owner Trustee. Any amounts distributed
-------------------------
hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the
Owner Trustee by wire transfer of funds of the type received by the Indenture
Trustee at such office and to such account or accounts of such entity or
entities as shall be designated by notice from the Owner Trustee to the
Indenture Trustee from time to time. The Owner Trustee hereby
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notifies the Indenture Trustee that unless and until the Indenture Trustee
receives notice to the contrary from the Owner Trustee, all amounts to be
distributed to the Owner Trustee pursuant to clause "third" of Section 3.01(a)
-----
shall be distributed by wire transfer of funds of the type received by the
Indenture Trustee to such account of the Owner Participant as the Owner
Participant may specify by notice to the Indenture Trustee.
SECTION 3.07. Investment of Amounts Held by Indenture Trustee. Any
------------------------------------------------
amounts held by the Indenture Trustee pursuant to the provisos set forth in
clauses "second" or "third" of Section 3.01(a), pursuant to Section 3.02,
------ -----
pursuant to the second proviso to the fourth sentence of Section 4.03 or
pursuant to any provision of any other Operative Agreement providing for amounts
to be held by the Indenture Trustee shall be invested by the Indenture Trustee
from time to time in Permitted Investments selected by the Owner Trustee or, in
the event the Owner Trustee shall so specify, as selected by the Lessee;
provided that if a Lease Event of Default shall have occurred and be continuing,
- --------
as selected by the Indenture Trustee. 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 Indenture Trustee shall not be liable for any
loss resulting from any investment required to be made by it under this
Indenture other than by reason of its willful misconduct or gross negligence,
and any such investment may be sold (without regard to its maturity) by the
Indenture Trustee without instructions whenever the Indenture Trustee reasonably
believes such sale is necessary to make a distribution required by this
Indenture.
SECTION 3.08. Series A Holders. By the acceptance of its Series A
----------------
Certificate, each holder of a Series A Certificate agrees that in the event that
such holder shall receive any payment on its Series A Certificate or otherwise
owing to it under the Operative Agreements which it is not entitled to receive
under Article III, it will hold any amount so received in trust for the person
entitled to such payment and will forthwith turn over such payment to the
Indenture Trustee in the form received to be applied as provided in Article III.
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ARTICLE IV
COVENANTS; EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of The Bank and the Owner Trustee. (a) The
-------------------------------------------
Bank hereby covenants and agrees that it will not directly or indirectly create,
incur, assume or suffer to exist any Lessor Liens attributable to it with
respect to any of the properties or assets of the Indenture Estate and it shall,
at its own cost and expense, promptly take such action as may be necessary to
discharge duly any such Lessor Lien. The Bank will cause restitution to be made
to the Indenture Estate in the amount of any diminution of the value thereof as
the result of any Lessor Liens thereon attributable to it.
(b) The Owner Trustee hereby covenants and agrees as follows:
(i) the Owner Trustee will duly and punctually perform its
obligations under each Lease and will duly and punctually pay the principal
of, Premium Amount, if any, and interest on, and all other amounts due
under the Certificates and hereunder in accordance with the terms of the
Certificates and this Indenture and all amounts payable by it to the
Certificate Holders under each Participation Agreement, the Special
Participation Agreement and the other Operative Agreements;
(ii) the Owner Trustee will not directly or indirectly create,
incur, assume or suffer to exist any Lessor Liens with respect to any of
the properties or assets of the Indenture Estate, and shall, at its own
cost and expense, promptly take such action as may be necessary to
discharge duly any such Lessor Lien, and the Owner Trustee will cause
restitution to be made to the Indenture Estate in the amount of any
diminution of the value thereof as the result of any Lessor Liens
attributable to it;
(iii) in the event a responsible officer in the Corporate Trust
Administration of The Bank shall have actual knowledge of an Indenture
Event of Default or an Event of Loss, the Owner Trustee will give prompt
written notice of such Indenture Event of Default or Event of Loss to the
Indenture Trustee, the Lessee and each Certificate Holder;
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(iv) the Owner Trustee will furnish to the Indenture Trustee, and the
Indenture Trustee will furnish to each Certificate Holder at the time
outstanding, promptly upon receipt thereof , duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and
other instruments furnished to the Owner Trustee under each Lease,
including, without limitation, a copy of each report or notice received
pursuant to Section 11 of each Lease, to the extent that the same shall not
have been furnished directly to such Certificate Holder or the Indenture
Trustee pursuant to such Lease;
(v) the Owner Trustee will not (except as permitted herein) assign
or pledge or otherwise dispose of, so long as this Indenture shall remain
in effect and shall not have been terminated pursuant to Section 10.01, any
of its right, title or interest hereby assigned to anyone other than the
Indenture Trustee, and, with respect to such right, title and interest
hereby assigned, will not, except as provided in this Indenture, (1) accept
any payment from the Lessee or any sublessee, enter into any agreement
amending or supplementing any of the Indenture Documents, execute any
waiver or modification of, or consent under, the terms of any of the
Indenture Documents, (2) exercise any rights with respect to the Indenture
Estate or the Collateral, (3) settle or compromise any claim arising under
any of the Indenture Documents, or (4) 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; and
(vi) the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing
thereof to the Lessee and the carrying out of the transactions contemplated
hereby and by each Lease, each Participation Agreement, the Trust Agreement
and the other Operative Agreements.
SECTION 4.02. 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 such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administration or governmental body):
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(a) any Lease Event of Default; or
(b) the failure (other than by reason of a Lease Event of Default) of
the Owner Trustee to pay when due any payment of principal of or Premium
Amount, if any, or interest on any Certificate and such failure shall have
continued unremedied for five Business Days, or the failure (other than by
reason of a Lease Event of Default) of the Owner Trustee to pay when due
any other amount due and payable hereunder, or under any Certificate, and
such failure shall have continued unremedied for ten Business Days after
notice thereof to the Owner Trustee; or
(c) any Lessor Lien required to be discharged by The Bank pursuant to
Section 4.01(a) or required to be discharged by the Owner Trustee pursuant
to Section 4.01(b) (ii) or required to be discharged by the Owner
Participant pursuant to Section 6.2.6 of any Participation Agreement shall
remain undischarged for a period of 30 calendar days after a responsible
officer of The Bank, the Owner Trustee or the Owner Participant, as the
case may be, shall have actual knowledge of such Lessor Lien; or
(d) any representation or warranty made by the Owner Trustee, any
Existing Owner Trustee, any Initial Owner Participant, the Owner
Participant or the Trust Company herein or in any other Operative
Agreement, or made by any Person (other than either of the Guarantor of the
Series B Certificates as to the Guarantee) guaranteeing or supporting the
obligations of the Owner Participant under the Operative Agreements in its
guarantee or support agreement, shall prove to have been false or incorrect
when made in any material respect to the Certificate Holders; or
(e) any failure by the Owner Trustee to observe any of its other
covenants in Section 4.01(b) or any failure by the Owner Participant to
observe any of its covenants in Section 6.2.5, 6.2.9 or 6.2.10 of any
Participation Agreement, or disaffirmance or repudiation by any Person
(other than either of the Guarantors of the Series B Certificates as to the
Guarantee) guaranteeing or supporting the obligations of the Owner
Participant under the Operative Agreements of its obligations under its
guarantee or support agreement; or
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(f) except as provided in the following paragraph (i) or (j), any
failure by the Owner Trustee or The Bank to observe or perform any other
covenant or obligation of the Owner Trustee or The Bank, as the case may
be, contained in this Indenture or in any Participation Agreement or any
failure by the Owner Participant to observe or perform any other covenant
or obligation of the Owner Participant contained in any Participation
Agreement or any failure by any Person (other than either of the Guarantors
of the Series B Certificates as to the Guarantee) guaranteeing or
supporting the obligations of the Owner Participant under the Operative
Agreements to perform any covenant or obligation of such Person under its
guarantee or support agreement which, in any case, is not remedied within a
period of 30 calendar days after notice thereof has been given to the Owner
Trustee, The Bank, the Owner Participant or such Person, as the case may
be; or
(g) either the Trust Estate or the Owner Trustee with respect thereto
(and not in its individual capacity) or the Owner Participant or any Person
(other than either of the Guarantors of the Series B Certificates as to the
Guarantee) guaranteeing or supporting the obligations of the Owner
Participant under the Operative Agreements shall (i) be generally not
paying its debts as they become due, (ii) file, or consent by answer or
otherwise to the filing against it of a petition for relief or
reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy or insolvency law of any
jurisdiction, (iii) make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a custodian, receiver, trustee or other
officer with similar powers of itself or of any substantial part of its
property, or (v) take corporate or comparable action for the purpose of any
of the foregoing; or
(h) a court or governmental authority of competent jurisdiction shall
enter an order appointing, without consent by the Trust Estate or the Owner
Trustee with respect thereto (and not in its individual capacity) or the
Owner Participant or any Person (other than either of the Guarantors of the
Series B Certificates as to the Guarantee) guaranteeing or supporting the
obligations of the Owner Participant under the Operative Agreements, a
custodian, receiver, trustee or other officer with similar powers with
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respect to the Trust Estate or the Owner Trustee with respect thereto (and
not in its individual capacity) or the Owner Participant or any such
Person, or with respect to any substantial part of its property, or
constituting an order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Trust Estate or
the Owner Trustee with respect thereto (and not in its individual capacity)
or the Owner Participant or any such Person, or if any petition for any
such relief shall be filed against the Trust Estate or the Owner Trustee
with respect thereto (and not in its individual capacity) or the Owner
Participant or any such Person, and such petition shall not be dismissed
within, or the order shall be unstayed and remain in effect for a period
of, 60 days; or
(i) any failure by The Bank to give notice, or to resign, if
required by Section 6.3.1.5 of any Participation Agreement, or (if The Bank
shall have given such notice and resigned as required by said Section
6.3.1.5) a successor Owner Trustee shall not have been appointed and
qualified within 30 days after The Bank's ceasing to be a "citizen of the
United States" within the meaning of Section 101(16) of the Act; or
(j) the Owner Trustee, The Bank, the Owner Participant or the Owners
shall do or fail to do any act, or shall meet or fail to meet any
condition, and as a result thereof the lien of this Indenture shall cease
to be a valid first priority lien on the Indenture Estate or shall
otherwise be adversely affected or the security interest granted in the
Pledge Agreement shall cease to be a duly perfected first priority security
interest in the Collateral covered thereby.
SECTION 4.03. Certain Cure Rights. In the event of any default by
-------------------
the Lessee in the payment when due (after giving effect to any applicable grace
period) of any installment of Basic Rent due under any Lease, the Owner
Participant (which term shall, except as otherwise expressly provided below, be
deemed to include, solely for purposes of this Section 4.03, any holder of a
Series B Certificate) may, within two Business Days after such default, without
the consent or concurrence of any Certificate
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Holder, pay, as provided in Section 2.05, for application in accordance with
Section 3.01 a sum equal to the amount of all (but not less than all) such
overdue Basic Rent. In the event of any default by the Lessee in any obligation
under any Lease other than the payment of Basic Rent, if such default can be
remedied by the payment of money and the Owner Participant shall furnish the
Owner Trustee with all funds necessary for remedying such default, the Owner
Participant may, within five Business Days after the occurrence of such default,
without the consent or concurrence of any Certificate Holder, instruct the Owner
Trustee to exercise the Owner Trustee's rights under Section 20 of such Lease to
perform such obligation on behalf of the Lessee (and the Owner Trustee hereby
agrees to accept such instruction and, upon failure to do so, the holders of the
Series B Certificates may exercise such right on the Owner Trustee's behalf).
Solely for the purpose of determining whether there exists an Indenture Event of
Default (a) any timely payment by the Owner Participant pursuant to, and in
compliance with, the first sentence of this Section 4.03 shall be deemed to
remedy (but solely for purposes of this Indenture) any default by the Lessee in
the payment of installments of Basic Rent theretofore due and payable and to
remedy (but solely for purposes of this Indenture) any default by the Owner
Trustee in the payment of any amount of principal and interest due and payable
under the Certificates and (b) any timely performance by the Owner Trustee (or
the holders of the Series B Certificates) of any obligation of the Lessee under
the relevant Lease pursuant to, and in compliance with, the second sentence of
this Section 4.03 shall be deemed to remedy (but solely for purposes of this
Indenture) any Lease Event of Default to the same extent that like performance
by the Lessee itself would have remedied such Lease Event of Default (but no
such remedy shall relieve the Lessee of its duty to pay all Rent and perform all
of its obligations pursuant to the relevant Lease). If, on the basis specified
in the preceding sentence, any Lease Events of Default shall have been remedied,
then any declaration pursuant to this Indenture that the Certificates are due
and payable or that an Indenture Event of Default exists hereunder, based solely
upon such Lease Events of Default, shall be deemed to be rescinded, and the
Owner Participant or the holders of the Series B Certificates shall (to the
extent of any such payments made by it or them) be subrogated to the rights of
the holders of the Certificates under Section 3.01(a), to receive from the
Indenture Trustee such payment of overdue Rent (and the payment of interest on
account of such Rent being overdue) and shall be entitled, so long as no other
Indenture Event of Default or
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Indenture Default shall have occurred and be continuing or would result
therefrom, to receive, subject to the provisions of this Indenture, such payment
upon receipt thereof by the Indenture Trustee; provided that the Owner
--------
Participant shall not otherwise attempt to recover any such amount paid by it on
behalf of the Lessee pursuant to this Section 4.03 except by demanding of the
Lessee payment of such amount or by commencing an action at law against the
Lessee for the payment of such amount; provided, further, that at no time while
-------- -------
an Indenture Event of Default shall have occurred and be continuing shall any
such demand be made or shall any such action be commenced (or continued) , and
any amounts nevertheless received by the Owner Participant in respect thereof
shall be held in trust for the benefit of, and promptly paid to, the Indenture
Trustee for distribution as provided in Section 3.03; and further provided that:
------- --------
(x) this Section 4.03 shall not apply with respect to any default in
the payment of Basic Rent due under any Lease if the Lessee itself shall
have theretofore failed to pay Basic Rent in the manner required under such
Lease (after giving effect to any applicable grace period) on (i) each of
the two Rent Payment Dates immediately preceding the date of such default,
or (ii) a total of six Rent Payment Dates;
(y) the second sentence of this Section 4.03 shall cease to apply,
and no payment by the Owner Participant in respect of Supplemental Rent or
performance of any obligation of the Lessee under any Lease by the Owner
Trustee shall be deemed to remedy or to have remedied any Lease Event of
Default for the purposes of this Indenture, if during the twelve-month
period immediately preceding the relevant default by the Lessee there shall
have been expended by the Owner Participant pursuant to the second sentence
of this Section 4.03 (and which shall have not been reimbursed by the
Lessee itself to the Owner Trustee for distribution to the Owner
Participant) an amount in excess of $2,000,000; and
(z) neither the Owner Trustee nor the Owner Participant shall have
the right to cure any Lease Event of Default except as specified in this
Section 4.03.
SECTION 4.04. Remedies. (a) If an Indenture Event of Default shall
--------
have occurred and be continuing and so long as the same shall be continuing
unremedied, then and in every such case,
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the Indenture Trustee may exercise any or all of the rights and powers and
pursue any and all of the remedies pursuant to this Article IV and shall have
and may exercise all of the rights and remedies of a secured party under the
Uniform Commercial Code and, in the event such Indenture Event of Default is an
Indenture Event of Default referred to in paragraph (a) of Section 4.02 and
Section 4.03 hereof shall either not apply or shall have ceased to apply with
respect to the relevant Lease Event of Default, any and all of the remedies
pursuant to Section 15 of any Lease and all of the rights and remedies of a
lessor under applicable law and may take possession of all or any part of the
properties covered or intended to be covered by the Lien and security interest
created hereby or pursuant hereto and may exclude the Owner Participant, the
Owner Trustee and the Lessee and all persons claiming under any of them wholly
or partly therefrom. Without limiting any of the foregoing, it is understood and
agreed that the Indenture Trustee may exercise any right of sale of any Aircraft
available to it, even though it shall not have taken possession of such Aircraft
and shall not have possession thereof at the time of such sale. It is further
understood and agreed that if the Indenture Trustee shall proceed to foreclose
the Lien of this Indenture, it shall, to the extent that it is then entitled to
do so hereunder and under any Lease, and is not then stayed or prevented from
doing so by operation of law or otherwise, proceed (to the extent it has not
already done so) to exercise one or more of the remedies referred to in Section
15 of such Lease (as it shall determine in its sole good faith discretion);
provided, however, that the Indenture Trustee may not foreclose the Lien of this
- -------- -------
Indenture when stayed or otherwise prevented from exercising remedies under the
Lease during the period ending on the earlier of (i) the expiration of 60 days
from the date the Indenture Trustee was first stayed or otherwise prevented from
exercising one or more of the remedies referred to in Section 15 of the Lease
and (ii) the date the Owner Trustee or the Indenture Trustee is entitled to take
possession of such Aircraft after the occurrence of such Indenture Event of
Default.
(b) If an Indenture Event of Default referred to in clause (g) or (h)
of Section 4.02 shall have occurred, or a Lease Event of Default of the type
referred to in clause (g) or (h) of said Section 4.02 shall have occurred with
respect to the Lessee, then and in every such case the unpaid principal of all
Certificates then outstanding, together with interest accrued but unpaid
thereon, Premium Amount, and all other amounts due to the holders of the
Certificates thereunder and hereunder and under
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the other Operative Agreements, shall, unless the Indenture Trustee acting upon
the instructions of the Majority in Interest of Certificate Holders shall
otherwise direct, immediately and without further act become due and payable,
without presentment, demand, protest or notice, all of which are hereby waived.
(c) If any other Indenture Event of Default shall have occurred and
be continuing, then and in every such case, the Indenture Trustee may at any
time, by written notice or notices to the Owner Trustee, declare all the
Certificates to be due and payable, whereupon the unpaid principal of all
Certificates then outstanding, together with accrued but unpaid interest
thereon, Premium Amount, and all other amounts due to the holders of the
Certificates thereunder, hereunder and under the other Operative Agreements,
shall immediately and without further act become due and payable without
presentment, demand, protest or other notice, all of which are hereby waived.
(d) Each Certificate Holder shall be entitled, at any sale pursuant
to Section 15 of any Lease or this Article IV, to credit against any purchase
price bid at such sale by such Certificate Holder all or any part of the unpaid
obligations owing to such Certificate Holder and secured by the Lien of this
Indenture; provided, however, that if a holder of a Series B Certificate shall
-------- -------
be the purchaser at any such sale as contemplated hereby, such holder may apply
the amount then due under its Series B Certificate against the purchase price of
the Indenture Estate, but only if and to the extent that such purchase price
exceeds the aggregate unpaid principal amount of all Series A Certificates
together with accrued and unpaid interest thereon to the date of payment on
unpaid Premium Amount plus all other sums then due and payable to the holders of
the Series A Certificates thereunder, hereunder or under the other Operative
Agreements. The Indenture Trustee and the Certificate Holders shall, upon any
such purchase, acquire good title to the property so purchased, to the extent
permitted by applicable law, free of all rights of redemption.
SECTION 4.05. Return of Aircraft, etc. (a) If an Indenture Event of
-----------------------
Default shall have occurred and be continuing, subject to Section 4.03, at the
request of the Indenture Trustee the Owner Trustee shall promptly execute and
deliver to the Indenture Trustee such instruments of title and other documents
as the Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative
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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 Indenture Estate to which the Indenture Trustee shall at the time be
entitled hereunder. If the Owner Trustee shall for any reason fail to execute
and deliver such instruments and documents after such request by the indenture
trustee, the indenture trustee may (i) obtain a judgment conferring on the
indenture trustee the right to immediate possession and requiring the owner
trustee to execute and deliver such instruments and documents to the Indenture
Trustee, to the entry of which judgment the Owner Trustee hereby specifically
consents, and (ii) pursue all or part of the Indenture Estate wherever such
estate may be found and may enter any of the premises of the lessee wherever it
may be or be supposed to be and search for and take possession of and remove the
same. All expenses of obtaining such judgment or of pursuing, searching for and
taking such property shall, until paid, be secured by the Lien of this
Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may,
from time to time, at the expense of the Indenture Estate, make all such
expenditures for maintenance, insurance, repairs, replacements, alterations,
additions and improvements to and of the Indenture Estate, as it may be
instructed by a Majority in Interest of Certificate Holders. In each such case,
the Indenture Trustee shall have the right to maintain, use, operate, store,
lease, control or manage the Indenture Estate and to carry on the business and,
without limiting the express provisions of Section 5.09, to exercise all rights
and powers of the Owner Participant and the Owner Trustee relating to the
Indenture Estate, as the Indenture Trustee shall be instructed by a Majority in
Interest of Certificate Holders, including the right to enter into any and all
such agreements with respect to the maintenance, insurance, use, operation,
storage, leasing, control, management or disposition of the Indenture Estate or
any part thereof as the Indenture Trustee may determine; and except for Excluded
Payments, the Indenture Trustee shall be entitled to collect and receive
directly all tolls, rents (including Rent), revenues, issues, income, products
and profits of the Indenture Estate and every part thereof. Such tolls, rents
(including Rent) , revenues, issues, income products and profits shall be
applied to pay the expenses of the use, operation, storage, leasing, control,
management or disposition of the Indenture Estate and of conducting the business
thereof, and of all maintenance, repairs, replacements, alterations,
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additions and improvements, and to make all payments which the Indenture Trustee
may be required or may elect to make, if any, for taxes, assessments, insurance
or other proper charges upon the Indenture Estate or any part thereof (including
the employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the owner Trustee), and all other
payments 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 by the Indenture Trustee.
(c) If an Indenture Event of Default shall have occurred and be
continuing, subject to Section 4.03, the Indenture Trustee may take any and all
actions as may be directed by the holders of the Series A Certificates or the
Series B Certificates, as the case may be, in respect of the Collateral.
SECTION 4.06. Remedies Cumulative. Each and every right, power and
-------------------
remedy given to the Indenture Trustee specifically or otherwise in this
Indenture shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Indenture
Trustee, and the exercise or the beginning of the exercise of any power or
remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy. No delay or omission
by the Indenture Trustee in the exercise of any right, remedy or power or in the
pursuit of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or the
Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings. In case the Indenture
-----------------------------
Trustee shall have instituted any proceeding to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee, then and in every such
case the Owner Trustee, the Indenture Trustee and the Lessee shall, subject to
any determination in such proceedings, be restored to their former positions and
rights hereunder with
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respect to the Indenture Estate, and all rights, remedies and powers of the
Indenture Trustee shall continue as if no such proceedings had been instituted.
SECTION 4.08. Waiver of Past Defaults. Upon written instructions
-----------------------
from a Majority in Interest of Certificate Holders, the Indenture Trustee shall
waive any past Indenture Default or Indenture Event of Default hereunder and its
consequences and upon any such waiver such 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 Indenture Event of Default or impair
any right consequent thereon; provided, however, that in the absence of written
-------- -------
instructions from all Certificate Holders, the Indenture Trustee shall not waive
any Indenture Default (i) in the payment of the principal of, or Premium Amount
or interest on, or other amounts due under, any Certificate then outstanding, or
(ii) in respect of a covenant or provision hereof which, under the proviso to
the first sentence of Section 9.01 or under the second sentence of Section 9.01,
cannot be waived without the consent of each Certificate Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notices.
--------
(a) Notice of Indenture Event of Default. In the event the Indenture
------------------------------------
Trustee shall have knowledge of an Indenture Event of Default or of an Indenture
Default arising from a failure to pay Basic Rent, the Indenture Trustee shall
forthwith give telephone notice thereof to the Owner Trustee, the Owner
Participant, the Lessee and the Certificate Holders (promptly confirmed by telex
or facsimile to such Persons not later than one Business Day thereafter).
Subject to the terms of Sections 4.08 and 5.03, the Indenture Trustee shall take
such action, or refrain from taking such action, with respect to any such
Indenture Event of Default (including with respect to the exercise of any rights
or remedies hereunder) as the Indenture Trustee shall be instructed in writing
by the Majority in Interest of Certificate Holders. Subject to the provisions
of Section 5.03, if the Indenture Trustee shall not have received
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instructions as above provided within 20 calendar days after mailing notice of
such Indenture Event of Default to the Certificate Holders, the Indenture
Trustee may, subject to instructions thereafter received pursuant to the
preceding provisions of this Section 5.01, take such action, or refrain from
taking such action, but shall be under no duty to take or refrain from taking
any action, with respect to any such Indenture Event of Default as it shall
determine advisable in the best interests of the Certificate Holders and shall
use the same degree of care and skill in connection therewith as a prudent man
would use under the circumstances in the conduct of his own affairs; provided
that the Indenture Trustee may not sell any Airframe or any Engine without the
consent of the Majority in Interest of Certificate Holders. In the event the
Indenture Trustee shall at any time foreclose or otherwise enforce this
Indenture, the Indenture Trustee shall forthwith notify the Certificate Holders,
the Owner Trustee, the Owner Participant and the Lessee. For all purposes of
this Indenture, in the absence of actual knowledge on the part of an officer in
its Corporate Trust Department, in the case of the Indenture Trustee, or its
Corporate Trust Department, in the case of the Owner Trustee, the Indenture
Trustee or the Owner Trustee, as the case may be, shall not be deemed to have
knowledge of any Indenture Default, any Lease Default or any Lease Event of
Default (except, in the case of the Indenture Trustee, the failure of the Lessee
to pay any installment of Basic Rent when due, which failure shall constitute
knowledge of an Indenture Default) unless notified in writing by the Lessee, the
Owner Trustee or one or more Certificate Holders. This Section 5.01, however,
is subject to the condition that, if at any time after the principal of the
Certificates shall have become due and payable pursuant to Section 4.04(b) or
(c) and before any judgment or decree for the payment of the money so due, or
any thereof, shall be entered, all overdue payments of interest upon the
Certificates and all other amounts payable under the Certificates (except the
principal of the Certificates which by such declaration shall have become
payable) shall have been duly paid, and every other Indenture Default and
Indenture Event of Default with respect to any covenant or provision of this
Indenture shall have been cured, then and in every such case a Majority in
Interest of Certificate Holders may (but shall not be obligated to) , by written
instrument filed with the Indenture Trustee, rescind and annul such acceleration
and its consequences; but no such rescission or annulment shall extend to or
affect any subsequent
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Indenture Default or Indenture Event of Default or impair any right consequent
thereon.
(b) Other Notices. The Indenture Trustee will furnish to each
-------------
Certificate 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 under any Operative
Agreements or the Collateral or received from the Owner Trustee pursuant to
Section 4.01(b) (iv) to the extent the same shall not have been otherwise
directly distributed to the Certificate Holders pursuant to the express
provision of any other Operative Agreement or the Collateral.
SECTION 5.02. Action Upon Instructions. (a) Subject to the terms of
------------------------
Sections 4.08, 5.01, 5.03 and 5.09, upon the written instructions at any time
and from time to time of a Majority in Interest of Certificate Holders, the
Indenture Trustee shall take such of the following actions as may be specified
in such instructions: (i) exercise such election or option, or make such
decision or determination, or give such notice, consent, waiver or approval or
exercise such right, remedy or power or take such other action hereunder, under
any other Operative Agreement or under the Collateral or in respect of any part
or all of the Indenture Estate as shall be specified in such instructions; (ii)
take such action with respect to, or to preserve or protect, the Indenture
Estate (including the discharge of Liens and the Collateral as shall be
specified in such instructions and as are consistent with this Indenture) or the
Collateral; and (iii) take such other action in respect of the subject matter of
this Indenture as is consistent with the terms hereof and the other Operative
Agreements. The Indenture Trustee will execute and the Owner Trustee will file
or cause to be filed such continuation statements with respect to financing
statements relating to the security interest created hereunder in the Indenture
Estate as may be specified from time to time in written instructions of a
Majority in Interest of Certificate Holders (which instructions may, by their
terms, be operative only at a future date and which shall be accompanied by the
execution form of such continuation statement so to be filed).
(b) If any Lease Event of Default shall have occurred and be
continuing, on request of a Majority in Interest of Certificate Holders, the
Indenture Trustee shall exercise such remedies under Section 15 of any Lease as
shall be specified in
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such request. The Indenture Trustee agrees to provide to the Certificate
Holders, the Owner Trustee and the Owner Participant concurrently with such
action by the Indenture Trustee, notice of such action by the Indenture Trustee,
provided that the failure to give any such notice to such Certificate Holders,
- --------
the Owner Trustee or the Owner Participant shall not affect the validity of such
action.
SECTION 5.03. Indemnification. The Indenture Trustee shall not be
----------------------------------------------------
required to take any action or refrain from taking any action under Sections
5.01 (other than the first sentence thereof) or 5.02 or Article IV or in respect
of the Collateral unless the Indenture Trustee shall have been indemnified by
all of the Certificate Holders (or, if in respect of the Collateral, the holders
of the Series entitled to instruct the Indenture Trustee with respect thereto)
against any liability, cost or expense (including counsel fees) which may be
incurred in connection therewith. The Indenture Trustee shall not be under any
obligation to take any action under this Indenture or in respect of the
Collateral and nothing in this Indenture contained shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of any of its rights or powers if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it. The Indenture Trustee shall not be
required to take any action under Section 5.01 (other than the first sentence
thereof) or 5.02 or Article IV, nor shall any other provision of this Indenture
be deemed to impose a duty on the Indenture Trustee to take any action, if the
Indenture Trustee shall have been advised by counsel that such action is
contrary to the terms hereof or is otherwise contrary to law. Notwithstanding
anything that may be to the contrary in the Operative Agreements, the holders of
the Series B Certificates shall have no obligation to indemnify the Indenture
Trustee if the holders of the Series A Certificates were grossly negligent or
were engaging in willful misconduct in giving their instructions to the
Indenture Trustee to take or refrain from taking any action.
SECTION 5.04. No Duties Except as Specified in Indenture or
---------------------------------------------
Instructions. The Indenture Trustee shall not have any duty or obligation to
- ------------
use, operate, store, lease, control, manage, sell, dispose of or otherwise deal
with any Aircraft or any other part of the Indenture Estate or the Collateral,
or to
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otherwise take or refrain from taking any action under, or in connection with,
this Indenture or any part of the Indenture Estate, except as expressly provided
by the terms of this Indenture or as expressly provided in written instructions
from Certificate Holders as provided in this Indenture; and no implied duties or
obligations shall be read into this Indenture against the Indenture Trustee.
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 Section 7.01) promptly take such action as may be
necessary to duly discharge all Liens on any part of the Indenture Estate or the
Collateral which result from claims against it in its individual capacity not
related to the mortgaging to it of any Aircraft or the administration of the
Indenture Estate or the Collateral or any other transaction contemplated by or
pursuant to the Special Participation Agreement or any document included in the
Indenture Estate.
SECTION 5.05. No Action Except Under Leases Participation Agreements,
-------------------------------------------------------
Trust Indenture or Instructions. The Owner Trustee and the Indenture Trustee
- -------------------------------
agree that they will not use, operate, store, lease, control, manage, sell,
dispose of or otherwise deal with any Aircraft or any other part of the
Indenture Estate or the Collateral except (i) in accordance with the terms of
the relevant Lease or the relevant Participation Agreement, or (ii) in
accordance with the powers granted or reserved to, or the authority conferred
upon, the Owner Trustee and the Indenture Trustee pursuant to this Indenture and
in accordance with the express terms hereof.
SECTION 5.06. Replacement Engines. At any time and from time to
-------------------
time, any Engine which has been (or is to be treated as if the same had been)
subject to an Event of Loss and may be replaced under Section 10.2 of the Lease
to which such Engine is/was subject by a Replacement Engine shall be replaced in
accordance with the provisions of this Section 5.06 and the provisions of
Section 10.2 of such Lease, and 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 Engine as
appropriate from the Lien of this Indenture and the Indenture Trustee shall
execute and deliver such instrument as aforesaid, but only upon receipt by or
deposit with the Indenture Trustee of the following:
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(a) A written request from the Owner Trustee, requesting such release and
specifically describing the Engine(s) so to be released.
(b) A certificate signed by a duly authorized officer of the Lessee
stating the following:
(i) a description of the Engine which shall be identified by
manufacturer's name and serial number;
(ii) a description of the Replacement Engine (including the
manufacturer's name and serial number) to be received as consideration for
the Engine to be released;
(iii) that on the date of the Indenture Supplement relating to the
Replacement Engine the Owner Trustee will be the legal owner of such
Replacement Engine free and clear of all Liens except Permitted Liens, that
such Replacement Engine will on such date be in good working order and
condition, and that such Replacement Engine is the same or an improved
model as the engine to be released;
(iv) the fair market value of the Replacement Engine as of the date
of such certificate (which value shall not be less than the then fair
market value of the Engine requested to be released, assuming such Engine
was in the condition and repair required to be maintained under such Lease
(but without regard to hours and cycles until overhaul));
(v) the fair market value of the Engine to be released (immediately
prior to the date such Engine suffered an Event of Loss);
(vi) that no Lease Default has occurred and is continuing or would
result from the making and granting of the request for release and the
addition of such Replacement Engine;
(vii) that the release of the Engine so to be released will not impair
the security of the Indenture or be in contravention of any of the
provisions of this Indenture; and
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(viii) that each of the conditions specified in Section 10.2.2 of
such Lease with respect to such Replacement Engine have been
satisfied.
(c) The appropriate instruments (i) transferring to the Owner Trustee
title to the Replacement Engine to be received as consideration for the
Engine to be released and (ii) assigning to the Owner Trustee the benefit
of all manufacturer's and vendor's warranties generally available with
respect to such Replacement Engine, and an Indenture Supplement subjecting
such Replacement Engine to the Lien of this Indenture.
SECTION 5.07. Indenture Supplements for Replacements. In the event of
--------------------------------------
a Replacement Engine being substituted as contemplated by Section 10.2 of any
Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the
Certificate Holders and the Lessee, subject to fulfillment of the conditions
precedent and compliance by the Lessee with its obligations set forth in Section
10.2 of such Lease, to execute and deliver an Indenture Supplement with respect
thereto as contemplated by Section 5.06(c), and, provided no Indenture Default
or Indenture Event of Default shall have occurred and be continuing, to execute
and deliver to the Lessee an appropriate instrument releasing the Engine being
replaced from the Lien of the Indenture.
SECTION 5.08. Effect of Replacement. In the event of the
---------------------
substitution of a Replacement Engine pursuant to Section 10.2 of any Lease and
Section 5.06, all provisions of this Indenture relating to the Engine or Engines
being replaced shall be applicable to such Replacement Engine or Engines with
the same force and effect as if such Replacement Engine or Engines were the same
engine or engines as the Engine or Engines being replaced but for the Event of
Loss with respect to the Engine or Engines being replaced.
SECTION 5.09. Certain Rights of Owner Trustee and Owner Participant.
-----------------------------------------------------
Notwithstanding any other provisions of this Indenture, including the Granting
Clause, the following rights shall be reserved to the Owner Trustee or the Owner
Participant, as the case may be (as separate and independent rights) to the
extent described herein:
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(a) at all times the Owner Trustee shall have the right, together
with the Indenture Trustee, to receive from the Lessee all notices,
certificates, reports, filings, opinions of counsel and other documents and
all information which any thereof is permitted or required to give or
furnish to the Owner Trustee or the Lessor pursuant to any Indenture
Document;
(b) so long as no Indenture Default shall have occurred and be
continuing, the Owner Trustee shall have the right together with the
Indenture Trustee (consent of both being required except in the case of
clause (iii) below) (i) to approve as satisfactory any other accountants,
inspectors, engineers or counsel to render services for or issue opinions
to the Owner Trustee pursuant to express provisions of the Indenture
Documents, (ii) to grant such consents, approvals and waivers as may be
requested under the Indenture Documents and (iii) to exercise inspection
rights pursuant to Section 12 of any Lease;
(c) the Owner Trustee shall have the non-exclusive right, as Lessor,
to seek specific performance of the covenants of the Lessee under any Lease
relating to the protection, insurance, maintenance, possession and use of
the Aircraft, and to maintain separate insurance with respect to any
Aircraft pursuant to Section 11.6 of the Lease to which such Aircraft is
subject (provided that no such insurance impairs or reduces coverage under
any insurance required to be maintained by the Lessee under Section 11 of
any Lease); and
(d) at all times each of the Owner Trustee (as Owner Trustee, as The
Bank and as Lessor) and the Owner Participant shall have the right, to the
exclusion of the Indenture Trustee, to demand, collect, sue for or receive
the payment of Excluded Payments due and payable to it.
Notwithstanding the foregoing, and subject to the provisions of Sections 4.03
and 4.04(a), the Indenture Trustee shall at all times have the right, to the
exclusion of the Owner Trustee and the Owner Participant to exercise the
remedies set forth in Section 15 of any Lease and in Article IV hereof.
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ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The Indenture Trustee
-------------------------------
accepts the duties hereby created and applicable to it and agrees to perform the
same but only upon the terms of this Indenture and agrees to receive and
disburse all monies constituting part of the Indenture Estate or collateral in
accordance with the terms hereof. The Bank and the indenture trustee, in their
individual capacities, shall not be answerable or accountable under any
circumstances, except (a) for their own willful misconduct or gross negligence,
(b) in the case of the Indenture Trustee, as provided in Section 2.05 or the
last sentence of Section 5.04, and (c) for liabilities that may result, in the
case of The Bank, from the inaccuracy or nonperformance of any representation or
warranty or covenant of The Bank expressly made in its individual capacity in
the Special Participation Agreement or any other Operative Agreement or in
Section 4.01(a) or 6.03 or, in the case of the Indenture Trustee, from the
inaccuracy of any representation or warranty of the Indenture Trustee made in
its individual capacity in the Special Participation Agreement or any other
Operative Agreement. None of the Owner Participant, The Bank or the Indenture
Trustee shall be liable for any action or inaction of any other.
SECTION 6.02. Absence of Duties. In the case of the Indenture
-----------------
Trustee, except in accordance with written instructions furnished pursuant to
Section 5.01 or 5.02, and except as provided in, and without limiting the
generality of, Sections 5.03 and 5.04 and, in the case of the Owner Trustee,
except as provided in Section 4.01(b), the Indenture Trustee and the Owner
Trustee shall have no duty (i) to see to any registration of any Aircraft or any
recording or filing of any Lease or of this Indenture or any other document, or
to see to the maintenance of any such registration, recording or filing, (ii) to
see to any insurance, whether or not the Lessee shall be in default with respect
thereto, (iii) to see to the payment or discharge of any Lien of any kind
against any part of the Trust Estate or the Indenture Estate, (iv) to confirm,
verify or inquire into the failure to receive any financial statements of the
Lessee or (v) to inspect any Aircraft at any time or ascertain or inquire as to
the performance or observance of any of the Lessee's covenants under the Lease
with respect to such Aircraft. Except as expressly otherwise herein, in the
Special Participation
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Agreement and in any Participation Agreement provided, the Loan Participants,
the Certificate Holders and the Owner Participant shall not have any duty or
responsibility hereunder, including, without limitation, any of the duties
mentioned in clauses (i) through (v) above.
SECTION 6.03. No Representations or Warranties as to Aircraft or
--------------------------------------------------
Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS TRUSTEE) NOR THE
- ---------
OWNER TRUSTEE NOR THE BANK MAKES OR SHALL BE DEEMED TO HAVE MADE ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS,
VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY,
OPERATION, MERCHANTABILITY, CONSTRUCTION, PERFORMANCE OR FITNESS FOR USE OR
PURPOSE OF ANY 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 ANY AIRCRAFT OR ANY PART THEREOF OR ANY OTHER
REPRESENTATION OR WARRANTY WITH RESPECT TO ANY AIRCRAFT OR ANY PART THEREOF
WHATSOEVER, except that The Bank in its individual capacity warrants that (i) on
the Delivery Date the Owner Trustee shall have received whatever title was
conveyed to it on the Delivery Date, and (ii) on the Closing Date each Aircraft
shall be free and clear of Lessor Liens attributable to The Bank. Neither The
Bank 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 Certificates or any Indenture Document
or as to the correctness of any statement contained in any thereof, except for
the representations and warranties of The Bank and the Indenture Trustee made in
their respective individual capacities under this Indenture or in the Special
Participation Agreement. The Loan Participants, the Certificate Holders and the
Owner Participant make no representation or warranty hereunder whatsoever.
SECTION 6.04. No Segregation of Monies; No Interest. Any monies paid
-------------------------------------
to or retained by the Indenture Trustee pursuant to any provision hereof and not
then required to be distributed to any Certificate Holder, the Lessee or the
Owner Trustee as provided in Article III need not be segregated in any manner
except to the extent required by law, and may be deposited under such general
conditions as may be prescribed by law, and the Indenture Trustee shall not
(except as otherwise provided in
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Section 3.07) be liable for any interest thereon; provided that any payments
--------
received or applied hereunder by the Indenture Trustee shall be accounted for by
the Indenture Trustee so that any portion thereof paid or applied pursuant
hereto shall be identifiable as to the source thereof.
SECTION 6.05. Reliance; Agents; Advice of Counsel. Neither the Owner
-----------------------------------
Trustee nor the Indenture Trustee shall incur liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the
Board of Directors of any party to any Participation Agreement or the Special
Participation Agreement, certified by the Secretary or an Assistant Secretary
thereof as duly adopted and in full force and effect, as conclusive evidence
that such resolution has been duly adopted and that the same is in full force
and effect; provided that the Owner Trustee shall accept the same as conclusive
evidence of adoption and that the same are in full and force and effect in
respect of the resolutions delivered pursuant to Section 2.1(c) (vii) of the
Participation Agreement. As to the aggregate unpaid principal amount of
Certificates outstanding as of any date, the Owner Trustee may for all purposes
hereof rely on a certificate signed by any Vice President or other authorized
corporate trust officer of the Indenture Trustee. As to any fact or matter
relating to the Lessee the manner of ascertainment of which is not specifically
described herein, the Owner Trustee and the Indenture Trustee may for all
purposes hereof rely on a certificate, signed by a duly authorized officer of
the Lessee, as to such fact or matter, and such certificate shall constitute
full protection to the Owner Trustee and the Indenture Trustee for any action
taken or omitted to be taken by them in good faith in reliance thereon. The
Indenture Trustee shall assume, and shall be fully protected in assuming, that
the Owner Trustee is authorized by the Trust Agreement to enter into this
Indenture and to take all action to be taken by it pursuant to the provisions
hereof, and shall not inquire into the authorization of the Owner Trustee with
respect thereto. In the administration of the trusts hereunder, the Owner
Trustee and the Indenture Trustee each may execute any of the trusts or powers
hereof and perform its powers and duties hereunder directly or through agents or
attorneys and may, at the expense of the Indenture Estate, advise with counsel,
accountants and other skilled
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persons to be selected and retained by it, and the Owner Trustee and the
Indenture Trustee shall riot be liable for anything done, suffered or omitted in
good faith by them in accordance with the written advice or written opinion of
any such counsel, accountants or other skilled persons.
SECTION 6.06. Capacity in Which Acting. Each of the Owner Trustee
------------------------
and the Indenture Trustee acts hereunder solely as trustee herein, and, in the
case of the Owner Trustee, as provided in the Trust Agreement, and not in its
individual capacity, except as otherwise expressly provided in the Operative
Agreements.
SECTION 6.07. Compensation. The Indenture Trustee shall be entitled
------------
to reasonable compensation, including expenses and disbursements, for all
services rendered hereunder and shall have a priority claim on the Indenture
Estate for the payment of such compensation, to the extent that such
compensation shall not be paid by the Lessee or others, as required under the
Operative Agreements, and shall have the right to use or apply any monies held
by it hereunder in the Indenture Estate toward such payments; it being
acknowledged that, provided that so long as (i) no Indenture Default or
Indenture Event of Default exists or (ii) this Indenture is not amended (x) in a
manner that increases the duties of the Indenture Trustee or (y) in a manner
that requires the Indenture Trustee to devote an amount of time in connection
with such amendment that it deems material, the only fee the Indenture Trustee
will be entitled to will be the fees paid to it on the Closing Date. The
Indenture Trustee agrees that it shall have no right against the Certificate
Holders or (except as provided in any Participation Agreement) the Owner
Participant for any fee as compensation for its services as trustee under this
Indenture.
SECTION 6.08. May Become Certificate Holder. Each of the institutions
-----------------------------
acting as Owner Trustee and Indenture Trustee hereunder may become a Certificate
Holder and have all rights and benefits of a Certificate Holder to the same
extent as if it were not the institution acting as Owner Trustee or Indenture
Trustee, as the case may be.
SECTION 6.09. Further Assurances; Financing Statements. At any time
----------------------------------------
and from time to time, upon the request of the Indenture Trustee or Lessee
(provided that any such request of Lessee is accompanied by an opinion of
counsel satisfactory to a Majority in Interest of Certificate Holders, to the
effect that the action so requested is necessary to enable Lessee to comply with
an Operative Agreement and does not
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conflict with any Operative Agreement), the Owner Trustee shall promptly and
duly execute and deliver any and all such further instruments and documents as
may be specified in such request and as are necessary or desirable to perfect,
preserve or protect the mortgage, security interests and assignments created or
intended to be created hereby, or to obtain for the Indenture Trustee the full
benefit of the specific rights and powers herein granted, including, without
limitation, the execution and delivery of Uniform Commercial Code financing
statements and continuation statements with respect thereto, or similar
instruments relating to the perfection of the mortgage, security interests or
assignments created or intended to be created hereby.
ARTICLE VII
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification. The Owner Trustee, not in
------------------------
its individual capacity, but solely in its capacity as owner trustee under the
Trust Agreement, hereby agrees, whether or not any of the transactions
contemplated hereby shall be consummated, 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, from and
against any and all liabilities, obligations, losses, damages, penalties, taxes
(excluding any taxes payable by the Indenture Trustee on or measured by any
compensation received by the Indenture Trustee for its services under this
Indenture), claims, actions, suits, costs, expenses or disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever which may
be imposed on, incurred by or asserted against the Indenture Trustee in its
individual capacity (whether or not also agreed to be indemnified against by any
other person under any other document) in any way relating to or arising out of
this Indenture, the Certificates, 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, non-acceptance, rejection,
ownership, delivery, lease, possession, use, operation, condition, sale, return
or other disposition of any Aircraft or any or any part thereof (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 Indenture Estate or the
action or inaction of the Indenture Trustee hereunder, except only (i) in the
case of willful misconduct or
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gross negligence of the Indenture Trustee in the performance of its duties
hereunder, (ii) as may result from the inaccuracy of any representation or
warranty of the Indenture Trustee in its individual capacity in the Special
Participation Agreement, (iii) as otherwise provided in Section 2.05 or the last
sentence of Section 5.04 or (iv) to the extent otherwise excluded by the terms
of Section 8.1 of any Participation Agreement from the Lessee's general
indemnity under said Section. The Indenture Trustee in its individual capacity
shall be entitled to indemnification from the Indenture Estate for any
liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense
or disbursement indemnified against pursuant to this Section 7.01 to the extent
not reimbursed by the Lessee or others, but without releasing any of them from
their respective agreements of reimbursement; and to secure the same the
Indenture Trustee shall have a prior lien on the Indenture Estate. The
indemnities contained in this Section 7.01 shall survive the termination of this
Indenture.
ARTICLE VIII
SUCCESSOR TRUSTEES; SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee. In the case of any
---------------------------------
appointment of a successor to the Owner Trustee pursuant to the Trust Agreement
or any merger, conversion, consolidation or sale of substantially all of the
corporate trust business of the Owner Trustee pursuant to the Trust Agreement,
the successor Owner Trustee shall give prompt written notice thereof to the
Indenture Trustee and to each Certificate Holder.
SECTION 8.02. Resignation of Indenture Trustee; Appointment of
------------------------------------------------
Successor. (a) The Indenture Trustee or any successor thereto may resign at
- ---------
any time without cause by giving at least 30 calendar days' prior written notice
to the Owner Participant, the Lessee, the Owner Trustee and each Certificate
Holder, such resignation to be effective upon the acceptance of the trusteeship
by a successor Indenture Trustee. In addition, a Majority in Interest of
Certificate Holders may at any time remove the Indenture Trustee without cause
by an instrument in writing delivered to the Owner Participant, the Owner
Trustee, the Lessee and the Indenture Trustee, and the Owner Trustee shall
promptly notify each Certificate Holder thereof in writing, such removal to be
effective upon the acceptance of the trusteeship by a successor Indenture
Trustee. In the case of the resignation or removal of the Indenture Trustee, a
Majority in Interest of Certificate Holders may appoint a successor Indenture
Trustee by
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an instrument signed by such Holders. If a successor Indenture Trustee shall
not have been appointed within 30 calendar days after such notice of resignation
or removal, the Indenture Trustee, the Owner Trustee or any Certificate 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 above provided. The successor Indenture Trustee so appointed by
such court shall immediately and without further act be superseded by any
successor Indenture Trustee appointed as above provided within one year from the
date of the appointment by such court.
(b) Any successor Indenture Trustee, however appointed, shall execute
and deliver to the Owner Trustee and to the predecessor Indenture Trustee an
instrument accepting such appointment, and thereupon such successor Indenture
Trustee, without further act, shall become vested with all the estates,
properties, rights, powers and duties of the predecessor Indenture Trustee
hereunder in the trusts hereunder applicable to it with like effect as if
originally named the Indenture Trustee herein; but nevertheless upon the written
request of such successor Indenture Trustee, such predecessor Indenture Trustee
shall execute and deliver an instrument transferring to such successor Indenture
Trustee, upon the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Indenture Trustee, and such
predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over
to such successor Indenture Trustee all monies or other property then held by
such predecessor Indenture Trustee hereunder.
(c) Any successor Indenture Trustee, however appointed, shall be a
"citizen of the United States" within the meaning of Section 101(16) of the Act
and shall also be a bank or trust company 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 Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of the Indenture Trustee may be transferred, shall, subject to
the terms of paragraph (c) of this Section, be the Indenture Trustee under this
Indenture without further act.
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SECTION 8.03. Appointment of Separate Trustees. (a) At any time or
--------------------------------
times, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the 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 or
if the Indenture Trustee shall be advised by counsel satisfactory to it that it
is so necessary or prudent in the interests of the Certificate Holders, or in
the event the Indenture Trustee shall have been requested to do so by a Majority
in Interest of Certificate Holders, the Indenture Trustee, by an instrument in
writing signed by it, and without the concurrence of the Owner Trustee, may
appoint one or more individuals or corporations to act as separate trustee or
separate trustees or co-trustee, acting jointly with the Indenture Trustee, or
to act as separate trustee or trustees of all or any part of the Indenture
Estate with such powers as may be provided in an agreement supplemental hereto.
(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 and the Owner Trustee hereby makes,
constitutes and appoints the Indenture Trustee its agent and attorney-in-fact
for it and in its name, place and stead to execute, acknowledge and deliver the
same in the event that the Owner Trustee shall not itself execute and deliver
the same within 20 days after receipt by it of such request so to do. 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 Indenture Estate or any part thereof, and with such rights and duties, as
shall be specified in the instrument of appointment, jointly with the Indenture
Trustee (except insofar as local law makes it necessary for any such separate
trustee or separate trustees or co-trustee to act alone) subject to all the
terms of this Trust Indenture. 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 Indenture
Estate and all assets, property, rights, powers, trusts, obligations and duties
of such separate trustee or co-trustee shall, so far as permitted by law, vest
in and be exercised by
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the Indenture Trustee, without the appointment of a successor to such separate
trustee or co-trustee unless and until a successor is appointed.
(c) All provisions of this Indenture which are for the benefit of the
Indenture Trustee shall extend to and apply to each separate trustee or co-
trustee appointed pursuant to the foregoing provisions of this Section 8.03,
including without limitation Article VII.
(d) Every separate trustee and co-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 monies 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
upon and exercised or performed by the Indenture Trustee and such
separate trustee or separate trustees or co-trustee 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 Indenture Estate in any such jurisdiction)
shall be exercised and performed by such separate trustee or separate
trustees or co-trustee;
(iii) No power hereby given to, or with respect to which it is
hereby provided may be exercised by, any such separate trustee or
separate trustees or co-trustee shall be exercised hereunder by such
Person except jointly with, or with the consent of, the Indenture
Trustee; and
(iv) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder.
If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law, or take
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any such action or shall be advised by such counsel that it is no longer legally
required or necessary or prudent in the interest of the Certificate Holders or
in the event the Indenture Trustee shall have been requested to do so by a
Majority in Interest of Certificate Holders, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any separate trustee or separate
trustees or co-trustee.
(e) Any request, approval or consent in writing by the Indenture
Trustee to any separate trustee or separate trustees or co-trustee shall be
sufficient warrant to such separate trustee or separate trustees or co-trustee,
as the case may be, to take such action as may be so requested, approved or
consented to.
(f) Notwithstanding any other provision of this Section 8.03, the
powers of any separate trustee or separate trustees or co-trustee appointed
pursuant to this Section 8.03 shall not in any case exceed those of the
Indenture Trustee hereunder.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations. (a) At any time
-------------------------------------
and from time to time, (i) the Owner Trustee (but only on the written request of
the Owner Participant) and the Indenture Trustee (but only on the written
request of a Majority in Interest of Certificate Holders) shall execute a
supplement hereto for the purpose of adding provisions to, or changing or
eliminating provisions of, this Indenture as specified in such request, and (ii)
the Owner Trustee may (but only with the written consent of the Owner
Participant and on the written request of a Majority in Interest of Certificate
Holders) enter into such written amendment of or supplement to any Lease or any
other Indenture Document to which it is party as may be specified in such
request; provided, however, that, without the consent of each Certificate
-------- -------
Holder, no such amendment of or supplement to any such document, or waiver or
modification of the terms of any thereof, shall (i) modify any of the provisions
of this Section 9.01 or the definitions of the terms "Excluded Payments",
-----------------
"Indenture Default", "Indenture Event of Default", "Lease Default", "Lease Event
----------------- -------------------------- ------------- -----------
of Default", "Lessor's Cost", "Majority in Interest of Certificate Holders" or
- ---------- ------------- -------------------------------------------
"Indenture Documents" contained herein or in any other Operative Agreement
-------------------
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86
(except to change default definitions by providing for additional events of
default), (ii) increase the principal amount of any Certificate or reduce the
amount or extend the time of payment of any amount owing or payable under any
Certificate or (except as provided in this Indenture) increase or reduce the
Premium Amount or interest payable on any Certificate (except that only the
consent of the Certificate Holder shall be required for any decrease in any
amounts of or the rate of Premium Amount or interest payable on such Certificate
or any extension for the time of payment of any amount payable under such
Certificate), or alter or modify the provisions of Article III with respect to
the order of priorities in which distributions thereunder shall be made or with
respect to the amount or time of payment of any such distribution, (iii) reduce,
modify or amend any indemnities in favor of the Loan Participants or any
Certificate Holder or in favor of or to be paid by the Owner Participant or
alter the definition of "Indemnified Party" to exclude any Loan Participant or
-----------------
any Certificate Holder (except as consented to by each Person adversely affected
thereby), (iv) or reduce the amount or extend the time of payment of Basic Rent,
Stipulated Loss Value or Termination Value (or other amounts payable therewith)
for any Aircraft as set forth in the Lease to which it is subject (except to the
extent required to match any action consented to by any Certificate Holder
referred to in the parenthetical phrase in clause (ii) above), or (v) modify,
amend or supplement any Lease or consent to any assignment of any Lease, in
either case releasing the Lessee from its obligations in respect of the payment
of Basic Rent (except as above provided), Stipulated Loss Value or Termination
Value (or other amounts payable therewith) for the Aircraft subject to such
Lease or altering the absolute and unconditional character of such obligations
as set forth in Section 17 of such Lease or change any of the circumstances
under which Stipulated Loss Value or Termination Value (or other amounts payable
therewith) are payable. This Section 9.01 shall not apply to any indenture or
indentures supplemental hereto permitted by, and complying with the terms of,
Section 5.07, Section 8.03 or Section 9.04. Notwithstanding the foregoing,
without the consent of each Certificate Holder, no such supplement to this
Indenture, or waiver or modification of the terms hereof or of any other
agreement or document shall expressly permit the creation of any Lien on the
Indenture Estate or any part thereof, except as herein expressly permitted, or
deprive any Certificate Holder of the benefit of the Lien of this Indenture on
the Indenture Estate, except as provided in Sections 5.01 and 5.02 or in
connection with the exercise of remedies under Article IV.
TRUST INDENTURE
87
SECTION 9.02. Trustees Protected. If, in the opinion of the
------------------
institution acting as Owner Trustee under the Trust Agreement or the institution
acting as the Indenture Trustee hereunder any document required to be executed
pursuant to the terms of Section 9.01 affects any right, duty, immunity or
indemnity with respect to it under this Indenture, the Indenture Trustee and the
Owner Trustee may in their discretion decline to execute such document.
SECTION 9.03. Documents Mailed to Holders. Promptly after the
---------------------------
execution by the Owner Trustee or the Indenture Trustee of any document entered
into pursuant to Section 9.01, the Owner Trustee shall mail, by certified mail,
postage prepaid, a conformed copy thereof to Indenture Trustee and the Indenture
Trustee shall mail, by certified mail, postage prepaid, a conformed copy thereof
to each Certificate Holder at its address shown on the Certificate Register, but
the failure of the Owner Trustee or Indenture Trustee, as the case may be, to
mail such conformed copies shall not impair or affect the validity of such
document.
SECTION 9.04. No Request Necessary for Lease Supplement or Indenture
------------------------------------------------------
Supplement. Notwithstanding anything contained in Section 9.01, no written
- ----------
request or consent of the Indenture Trustee, any Certificate Holder or the Owner
Participant pursuant to Section 9.01 shall be required to enable the Owner
Trustee to enter into any Lease Supplement with the Lessee pursuant to the terms
of any Lease to subject an Aircraft or other property thereto or to execute and
deliver an Indenture Supplement to subject an Aircraft or other property hereto
pursuant to the terms hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. Upon (or at any time after)
------------------------
payment in full of the principal of and interest on and Premium Amount, if any,
and all other amounts due under, or otherwise due to the holders of, all
Certificates and provided that there shall then be no other amounts due to the
Loan Participants, the Certificate Holders and the Indenture Trustee hereunder
or under any Participation Agreement or the other Operative Agreements 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 each Aircraft from the Lien of this
TRUST INDENTURE
88
Indenture and releasing the Operative Agreements from the assignment and pledge
thereof hereunder, and the Indenture Trustee shall execute and deliver such
instrument as aforesaid and, at the Owner Trustee's expense, will execute and
deliver such other instruments or documents as may be reasonably requested by
the Owner Participant to give effect to such release; provided, however, that
-------- -------
this Indenture and the trusts created hereby shall earlier terminate and this
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Indenture Trustee of all property part of the Indenture
Estate and, in the case of any sale or other disposition pursuant to Section
4.04, the final distribution by the Indenture Trustee of all monies or other
property or proceeds constituting part of the Indenture Estate in accordance
with the terms hereof. Except as aforesaid otherwise provided, this Indenture
and the trusts created hereby shall continue in full force and effect in
accordance with the terms hereof.
SECTION 10.02. No Legal Title to Indenture Estate in Holders. No
---------------------------------------------
Certificate Holder shall have legal title to any part of the Indenture Estate.
No transfer, by operation of law or otherwise, of any Certificate or other
right, title and interest of any Certificate Holder in and to the Indenture
Estate or hereunder shall operate to terminate this Indenture or entitle such
Certificate 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 Indenture
Estate.
SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding. Any
------------------------------------------------
sale or other conveyance of any Aircraft or any part of the Indenture Estate by
the Indenture Trustee made pursuant to the terms of this Indenture or of any
Lease shall bind the Certificate Holders and shall be effective to transfer or
convey all right, title and interest of the Indenture Trustee, the Owner
Trustee, the Owner Participant and the Certificate Holders in and to such
Aircraft or such part of the Indenture Estate (and, without limiting the
generality of foregoing, shall be free and clear of the Lien of this Indenture).
No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or conveyance or
as to the application of any sale or other proceeds with respect thereto by the
Indenture Trustee.
SECTION 10.04. Indenture for Benefit of Owner Trustee Indenture
------------------------------------------------
Trustee. Owner Participant and Certificate Holders. Nothing in this Indenture,
- -------
whether express or implied, shall be construed to give to any Person other than
The Bank, the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Lessee
TRUST INDENTURE
89
and the Certificate Holders any legal or equitable right, remedy or claim under
or in respect of this Indenture.
SECTION 10.05. No Action Contrary to Lessee's Rights Under any Lease.
-----------------------------------------------------
Notwithstanding any of the provisions of this Indenture or the Trust Agreement
to the contrary, so long as no Lease Event of Default shall have occurred and be
continuing, neither the Indenture Trustee nor the Owner Trustee will take any
action in violation of the Lessee's rights under any Lease, including the right
to possession and use of the Aircraft subject to such Lease in accordance with
the terms of such Lease.
SECTION 10.06. 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, mailed by
certified mail, postage prepaid, or by confirmed telex, or by confirmed telecopy
and (i) if to the Indenture Trustee, addressed to it at its office at 35 North
Sixth Street, Reading, Pennsylvania 19601, Attention: Corporate Trust
Administration (telecopier: (215) 655-1349), (ii) if to the Owner Trustee,
addressed to it at its office at 79 South Main Street, P.O. Box 30007, Salt Lake
City, Utah 84130, Attention: Corporate Trust Department (telecopy: (801) 350-
5053), or (iii) if to any Participant or any Certificate Holder, addressed to
such party at such address as such party shall have furnished by notice to the
Owner Trustee and the Indenture Trustee, or, until an address is so furnished,
addressed to the address of such party (if any) set forth on the signature pages
of the Special Participation Agreement. Whenever any notice in writing is
required to be given by the Owner Trustee or the Indenture Trustee or any
Certificate Holder to any of the other of them, such notice shall be deemed
given and such requirement satisfied when such notice is received, if such
notice is received, if such notice is mailed by certified mail, postage prepaid,
or is sent by confirmed telex, or by confirmed telecopy addressed as provided
above. Any party hereto may change the address to which notices to such party
will be sent by giving notice of such change to the other parties to this
Indenture.
SECTION 10.07. Severability. Any provision of this Indenture which
------------
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
TRUST INDENTURE
90
SECTION 10.08. No Oral Modifications or Continuing Waivers. No terms
-------------------------------------------
or provisions of this Indenture or the Certificates may be changed, waived,
discharged or terminated orally, but, only by an instrument in writing signed by
the party or other Person against whom enforcement of the change, waiver,
discharge or termination is sought and any other party or other Person whose
consent is required pursuant to this Indenture; and any waiver of the terms
hereof or of any Certificate shall be effective only in the specific instance
and for the specific purpose given.
SECTION 10.09. Successors and Assigns. All covenants and agreements
----------------------
contained herein shall be binding upon, and inure to the benefit of, each of the
parties hereto and the successors and assigns of each, all as herein provided.
Any request, notice, direction, consent, waiver or other instrument or action by
any Certificate Holder shall bind the successors and assigns of such Certificate
Holder. This Indenture and the 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 10.10. Headings. The headings of the various Articles and
--------
Sections herein and in the table of contents hereto are for the convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 10.11. Governing Law; Counterpart Form. This Indenture shall
-------------------------------
in all respects be governed by, and construed in accordance with, the law of the
State of New York, including all matters of construction, validity and
performance. This Indenture may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
SECTION 10.12. Collateral. The Indenture Trustee shall (i) take such
----------
action with respect to the Collateral under the Guarantee or Pledge Agreement,
as the case may be, (ii) act on instructions in respect thereof, (iii) be
entitled to indemnification in respect of any action taken with respect to any
Collateral, (iv) have duties and take action in respect of the Collateral and
(v) otherwise be entitled to protections of this Indenture in respect of the
Collateral, as though, in each case, the Collateral were a part of the Indenture
Estate.
TRUST INDENTURE
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed by their respective officers there-unto duly authorized, as of
the day and year first above written, and acknowledge that this Indenture has
been made and delivered in the City of New York, and this Indenture having
become effective only upon such execution and delivery.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as otherwise expressly
provided in the Operative Agreements,
but solely as Owner Trustee
By [SIGNATURE ILLEGIBLE]
---------------------------------
Title: Asst. Vice President
MERIDIAN TRUST COMPANY,
as Indenture Trustee
By _________________________________
Title:
TRUST INDENTURE
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed by their respective officers there-unto duly authorized, as of
the day and year first above written, and acknowledge that this Indenture has
been made and delivered in the City of New York, and this Indenture having
become effective only upon such execution and delivery.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as otherwise expressly provided
in the Operative Agreements, but solely
as Owner Trustee
By _________________________________
Title:
MERIDIAN TRUST COMPANY,
as Indenture Trustee
By [SIGNATURE ILLEGIBLE]
---------------------------------
Title: VICE PRESIDENT
TRUST INDENTURE
EXHIBIT A
to
Amendment and Restatement
of Trust Indenture and
Security Agreement
TRUST INDENTURE SUPPLEMENT No.________
TRUST INDENTURE SUPPLEMENT NO. ___ (Southwest Airlines 1990 Trust II,
III & IV) dated ___________, ____ (this "Indenture Supplement") of FIRST
--------- -----------
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity,
except as otherwise expressly provided in the Operative agreements, but solely
as owner trustee under the Trust Agreement (in such capacity, herein called the
"Owner Trustee").
- ---------------
W I T N E S S E T H :
WHEREAS, the Amendment and Restatement dated as of August 25, 1995 of
Trust Indenture and Security Agreement dated as of December 30, 1991 (Southwest
Airlines 1990 Trust II, III & IV) (the "Indenture") between the Owner Trustee
---------
and Meridian Trust Company as Indenture Trustee (the "Indenture Trustee"),
-----------------
provides for the execution and delivery of a supplement thereto substantially in
the form hereof which shall particularly describe the Aircraft (such term and
other defined terms in the Indenture being herein used with the same meanings)
and Replacement Engine included in the Trust Indenture Estate, and shall
specifically mortgage such Aircraft or Replacement Engine, as the case may be,
to the Indenture Trustee.
WHEREAS*, the Indenture relates to each Airframe and Engines described
below and a counterpart of the Indenture is attached hereto and made a part
hereof and this Indenture Supplement, together with such counterpart of the
Indenture, is being filed for recordation on the date hereof with the Federal
Aviation Administration as one document.
WHEREAS**, the Indenture and Trust Indenture Supplement No. ___
(Southwest Airlines 1990 Trust II, III & IV) dated ______________ (the Indenture
being attached to and made a part of such Indenture Supplement and filed
therewith) have been duly recorded pursuant to the Federal Aviation Act of 1958,
* This recital is to be included only in the first Indenture Supplement.
** This recital not to be included in the first Indenture Supplement.
2
as amended, on __________ , 1991, as one document and have been assigned
Conveyance No.
NOW, THEREFORE, THIS INDENTURE SUPPLEMENT WITNESSETH, that, to secure
(i) the prompt payment of the principal of and Premium Amount (if any) and
interest on, and all other amounts due with respect to, (a) the Series A
Certificate and (b) the Series B, Certificates from time to time outstanding
under the Indenture, (ii) the performance and observance by the Owner Trustee
and the Owner Participant of all the agreements, covenants and provisions for
the benefit of the Loan Participants and the Certificate Holders in the
Indenture and in each Participation Agreement, the Special Participation
Agreement and the Certificates contained, (iii) the prompt payment of any and
all amounts from time to time owing under the Indenture or each Participation
Agreement or the other Operative Agreements by the Owner Trustee, the Owner
Participant or the Lessee to the Loan Participants and the Certificate Holders
and (iv) the performance and observance by the Guarantors of the Series B
Certificates of all the agreements, covenants and provisions for the benefit of
the Loan Participants and the Certificate Holders in each Participation
Agreement, the Special Participation Agreement and the Guarantee, and for the
uses and purposes and subject to the terms and provisions of the Indenture, and
in consideration of the premises and of the covenants contained in the
Indenture, and of the acceptance of the Certificates by the Certificate Holders,
and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or
before the delivery hereof, the receipt whereof is hereby acknowledged, the
Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed,
mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign,
transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee and
its successors and assigns, for the security and benefit of the Loan
Participants and the Certificate Holders, in the trust created by the Indenture,
a first priority security interest in and first mortgage lien upon, all right,
title and interest of the Owner Trustee in, to and under the following described
property:
3
AIRFRAMES
Three airframes identified as follows:
FAA Manufacturer' s
Registration Serial
Manufacturer Model Number Number
- ------------ ----- ------ ------
together with all Parts, appliances, equipment, instruments and accessories
(including, without limitation, radio and radar) from time to time thereto
belonging, owned by the Owner Trustee and installed in or appurtenant to said
aircraft.
AIRCRAFT ENGINES
( ) aircraft engines, each such engine
having 750 or more rated takeoff horsepower
or the equivalent thereof, identified as follows:
Manufacturer' s
Manufacturer Model Serial Number
- ------------ ----- -------------
together with all Parts, equipment and accessories thereto belonging, by
whomsoever manufactured, owned by the Owner Trustee and installed in or
appurtenant to said aircraft engines.
Together with all substitutions, replacements and renewals of the
property above described, and all property which shall hereafter become
physically attached to or incorporated in the property above described, whether
the same are now owned by the Owner Trustee or shall hereafter be acquired by
it.
As further security for the obligations referred to above and secured
by the Indenture and hereby, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors and assigns, for the
4
security and benefit of the Loan Participants and the Certificate Holders, in
the trust created by the Indenture, all of the right, title and interest of the
Owner Trustee in, to and under [the Lease Supplement (Southwest Airlines 1990
Trust II) No. 1 dated September 27, 1990, the Lease Supplement (Southwest
Airlines 1990 Trust III) No. 1 dated September 27, 1990 and the Lease Supplement
(Southwest Airlines 1990 Trust IV) No. 1 dated September 27, 1990] [the Lease
Supplement (Southwest Airlines 1990 Trust __) No. __ of even date] (other than
Excluded 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 Loan Participants and the Certificate Holders for the uses and purposes and
subject to the terms and provisions set forth in the Indenture.
This Indenture Supplement shall be construed as supplemental to the
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
This Indenture Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that each
Airframe/Engines referred to in this Indenture Supplement and the aforesaid
Lease Supplements have been delivered to the Owner Trustee and are included in
the property of the Owner Trustee and are covered by all the terms and
conditions of the Trust Agreement and are subject to the Lien of the Indenture.
5
IN WITNESS WHEREOF, the Owner Trustee has caused this Indenture
Supplement to be duly executed by one of its officers thereunto authorized, this
_______ day of ________, _____.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION ,
not in its individual capacity
except as otherwise expressly
provided in the Operative Agreements,
but solely as Owner Trustee
By_____________________________
Title:
EXHIBIT B
to
Amendment and Restatement
of Trust Indenture
and Security Agreement
FORM OF TAX CERTIFICATE
Reference is made to the Certificate[s] held by the undersigned
pursuant to the Trust Indenture and Security Agreement (Southwest Airlines 1990
Trust II, III & IV) dated as of December 30, 1991 between First Security Bank of
Utah, National Association, as Owner Trustee, and Meridian Trust Company, as
Indenture Trustee (capitalized terms not otherwise defined herein being used
herein as therein defined). The undersigned hereby declares under the penalties
of perjury that:
(1) The undersigned is the beneficial owner of the Certificates
issued in its name;
(2) the income from the Certificates held by the undersigned is not
effectively connected with a trade or business within the United
States conducted through a permanent establishment of the
undersigned within the United States;
(3) the undersigned is not a bank;
(4) the undersigned is not a controlled foreign corporation related
(within the meaning of Internal Revenue Code ("I.R.C.") Section
864(d)(4)) to the Owner Trustee or the Owner Participant;
(5) The undersigned is not a 10% shareholder (within the meaning of
I.R.C. section 871(h) (3) (B)) of the Owner Trustee or the Owner
Participant;
(6) the undersigned is a person other than (i) a citizen or resident
of the United States of America, its territories and possessions
(including the Commonwealth of Puerto Rico and all other areas
subject to its jurisdiction) (the "United States") , (ii) a
corporation, partnership or other entity created or organized
under the laws of the United States or any political subdivision
thereof or therein or (iii) an estate or trust that is subject to
United States federal income taxation regardless of the source of
its income; and
(7) the undersigned, if an individual, will not (i) be a lawful
permanent resident of the United States at
2
any time during the calendar year, (ii) meet the substantial
presence test of I.R.C. section 7701(b)(3), or (iii) make an
election under I.R.C. section 7701(b) (4) to be treated as a
united states resident.
By executing this certificate, the undersigned agrees that (1) if the
information provided on this certificate changes, the undersigned shall so
inform the Indenture Trustee in writing within thirty days of such change and
(2) the undersigned shall furnish the Indenture Trustee a properly completed and
currently effective certificate in either the calendar year in which payment is
to be made by the Indenture Trustee to the undersigned, or in either or the two
calendar years preceding such payment.
Date:
[Name of Certificate Holder]
By_______________________________
Title:
EXHIBIT C
to
Amendment and Restatement
of Trust Indenture and
Security Agreement
(Intentionally omitted.)
EXHIBIT D
to
Amendment and Restatement
of Trust Indenture and
Security Agreement
(Intentionally omitted.)
EXHIBIT E
to
Amendment and Restatement
of Trust Indenture and
Security Agreement
Swap Upside
-----------
"Swap Upside" means, as at any date of (i) prepayment of any Series A
-----------
Certificate pursuant to Section 2.11(a) or (ii) purchase by a holder or holders
of Series B Certificates pursuant to Section 2.13(b) and for any holder of
Series A Certificate that is a bank, a bank operating subsidiary or otherwise a
floating rate lender, an amount, if any, equal to the amount the Swap Counter-
party pays to such holder on such date to terminate the Swap Transaction of such
holder on such date.
ANNEX I
to
Amendment and Restatement
of Trust Indenture and
Security Agreement
Schedule of Series A Certificates Principal Payments
----------------------------------------------------
Payment Date Principal
(Interest Payment Amount to
Date Closest to) Be Paid
------------------ ---------
31-Mar-92 $577,950.46
30-Jun-92 $589,009.71
30-Sep-92 $536.386.96
31-Dec-92 $607,924.40
31-Mar-93 $626,965.77
30-Jun-93 $635,322.57
30-Sep-93 $644,104.70
31-Dec-93 $656,565.26
31-Mar-94 $675,469.76
30-Jun-94 $685,293.62
30-Sep-94 $695,591.61
31-Dec-94 $709,048.21
31-Mar-95 $727,805.02
30-Jun-95 $739,211.83
30-Sep-95 $751,145.40
31-Dec-95 $765,676.73
- CONTINUED -
Schedule of Series A Certificates Principal Payments (Continued)
----------------------------------------------------
Payment Date Principal
(Interest Payment Amount to
Date Closest to) Be Paid
--------------- -------
30-Jan-96 159,716.30
29-Feb-96 160,781.08
30-Mar-96 161,852.95
30-Apr-96 162,931.97
30-May-96 164,018.18
30-Jun-96 165,111.64
30-Jul-96 166,212.38
30-Aug-96 167,320.46
30-Sep-96 168,435.94
30-Oct-96 169,558.84
30-Nov-96 170,689.23
30-Dec-96 171,827.16
30-Jan-97 172,972.68
28-Feb-97 174,125.82
30-Mar-97 175,286.67
30-Apr-97 176,455.24
30-May-97 177,631.61
30-Jun-97 178,815.83
30-Jul-97 180,007.92
30-Aug-97 181,207.98
30-Sep-97 182,416.04
30-Oct-97 183,632.14
30-Nov-97 184,856.35
30-Dec-97 186,088.73
30-Jan-98 187,329.33
28-Feb-98 188,578.18
30-Mar-98 189,835.37
30-Apr-98 191,100.94
30-May-98 192,374.95
30-Jun-98 193,657.45
30-Jul-98 194,948.49
30-Aug-98 196,248.16
30-Sep-98 197,556.47
30-Oct-98 198,873.52
30-Nov-98 200,199.34
30-Dec-98 201,534.00
30-Jan-99 202,877.57
28-Feb-99 204,230.08
30-Mar-99 205,591.61
30-Apr-99 206,962.23
30-May-99 208,341.97
30-Jun-99 209,730.92
30-Jul-99 211,129.13
30-Aug-99 212,536.65
30-Sep-99 213,953.56
48
otherwise provided herein, impair, as between the Owner Trustee, the Owner
Participant, the Lessee and the holders of the Series B Certificates, the
obligation of the Owner Trustee, which, subject only to Section 2.04, is
unconditional and absolute, to pay to the holders of the Series B
Certificates the principal thereof, interest thereon and all other amounts
payable hereunder and under the other Operative Agreements in accordance
with the terms and the provisions hereof and thereof nor the obligation of
the Lessee which is unconditional and absolute, to pay Supplemental Rent in
accordance with the terms and provisions of each Lease.
(j) Notwithstanding anything that may be to the contrary in any of the
Operative Agreements, the holders of the Series B Certificates shall at all
times be entitled to all the rights, title, benefits and interest of the
Guarantee Beneficiary and, in respect thereof, shall not be accountable to
the Indenture Trustee or to the holders of the Series A Certificates for
any action taken or not taken or for any sums received in respect of the
Guarantee or any Collateral thereunder.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE INDENTURE ESTATE
SECTION 3.01. Basic Rent Distribution and Application of Amounts upon
-------------------------------------------------------
Rent Default.
- -------------
(a) Basic Rent Distribution. Except as otherwise provided in Section
-----------------------
3.03, each installment of Basic Rent, any payment of interest payable on any
Interest Payment Date or on overdue installments of Basic Rent, and any payment
received by the Indenture Trustee as contemplated by Section 4.03 shall be
promptly distributed in the following order of priority:
first, 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 and other amounts (as well as any interest on overdue
principal and interest and other amounts) then due on or in respect of the
Series A Certificates shall be distributed to the holders
TRUST INDENTURE
49
thereof ratably, without priority of any one Series A Certificate over any
other Series A Certificate, in the proportion that the amount of such
payment or payments then due under each Series A Certificate bears to the
aggregate amount of the payments then due under all Series A Certificates;
second, 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 and other amounts (as well as any interest on overdue
principal, interest and other amounts) then due under, on or in respect of
the Series B Certificates shall be distributed to the holders thereof
ratably, without priority of any one Series B Certificate over any other
Series B Certificate, in the proportion that the amount of such payment or
payments then due under each such Series B Certificate bears to the
aggregate amount of the payments then due under all such Series B
Certificates; provided, however, that if an Indenture Default shall have
-------- -------
occurred and be continuing, then any such installment or payment shall not
be distributed as provided in this clause "second" but shall be held by the
------
Indenture Trustee as part of the Indenture Estate until whichever of the
following shall first occur: (i) all Indenture defaults shall have been
cured, in which event such installment or payment shall, to the extent not
theretofore applied as provided herein, be distributed as provided in this
clause "second", or (ii) Section 3.02 or Section 3.03 shall be applicable,
------
in which event such balance shall be distributed in accordance with the
provisions of said section 3.02 or section 3.03, as the case may be, in
which event such installment or payment shall, to the extent not
theretofore applied as provided herein, be distributed as provided in this
clause "second"; and
------
third, the balance, if any, of such installment or payment remaining
-----
thereafter shall be distributed to the Owner Trustee for distribution
pursuant to the Trust Agreement; provided, however, that if an Indenture
-------- -------
Default shall have occurred and be continuing, then such balance shall not
be distributed as provided in this clause "third" but shall be held by the
-----
Indenture Trustee as part of the Indenture Estate until whichever of the
following shall first occur: (i) all indenture defaults shall have been
cured, in which event such balance shall, to the extent not
TRUST INDENTURE
50
theretofore distributed as provided herein, be distributed as provided in
this clause "third", or (ii) Section 3.02 or Section 3.03 shall be
-----
applicable, in which event such balance shall be distributed in accordance
with the provisions of said Section 3.02 or Section 3.03, as the case may
be.
(b) Application of Other Amounts Held by Indenture Trustee Upon Rent
----------------------------------------------------------------
Default. Except as otherwise provided in Section 3.03, if (i) as a result of
- --------
any failure by the Lessee to pay Basic Rent in full on any date when an
installment of Basic Rent is due, or (ii) for any other reason there shall not
have been distributed on any Rent Payment Date the full amount then
distributable pursuant to clauses "first" and "second" of Section 3.01(a), the
----- ------
Indenture Trustee shall, if so requested by a Majority in interest of
Certificate Holders, distribute other payments of the character referred to in
section 3.04(b) then held by it or thereafter received by it, to the holders of
all certificates to the extent necessary to enable the Indenture Trustee to make
all the distributions then due pursuant to such clauses "first" and "Second" in
----- ------
the priority specified in section 3.01 (a).
SECTION 3.02. Lease Termination, Event of Loss and Replacement. (a)
------------------------------------------------
Except as otherwise provided in Section 3.03, any payment received by the
Indenture Trustee as the result of an Event of Loss with respect to any Airframe
or any Aircraft, or in connection with a voluntary prepayment hereunder pursuant
to Section 2.11(a), shall be applied to prepayment of the Certificates and to
all other amounts payable thereunder or hereunder or under the other Operative
Agreements as provided in Section 2.11(a) or 2.11(b) by applying such funds in
the following order of priority: first, so much of such payment as shall be
-----
necessary to reimburse the Indenture Trustee for any costs or expenses incurred
in connection with such prepayment shall be paid to the Indenture Trustee;
second, so much of such payment as shall be necessary to pay all amounts then
- ------
due to the holders of the Series A Certificates pursuant to Section 2.11(a) or
2.11(b), as the case may be, shall be distributed to such holders, ratably,
without priority of any one Series A Certificate holder over any other such
holder; third, so much of such payment as shall be necessary to pay all amounts
-----
without priority of any one Series B Certificate holder over any
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51
other such holder; and fourth, the balance, if any of such payment remaining
------
thereafter shall be distributed in the manner set forth in clause "tenth" OF
-----
Section 3.03.
(b) Except as otherwise provided in Section 3.03, any amounts received
directly or indirectly from any governmental authority, insurer or other party
pursuant to any provision of Section 10.4, 10.5 or 11 of any Lease or otherwise
as the result of loss or damage not constituting such an Event of Loss with
respect to the Airframe or any Engine subject to such Lease, or as a result of
such loss or damage constituting such 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
said Section 10.4, 10.5 or 11 but for the fact that a Lease Event of Default
shall have occurred and be continuing, shall be held by the Operative
Agreements, as security for the obligations of the Lessee under the Operative
Agreements and shall be invested in accordance with the terms of Section 3.07
and at such time as the conditions for payment to the Lessee specified in said
Section 10.4, 10.5 or 11, as the case may be, shall be fulfilled and there shall
not be continuing any Lease Event of Default, such amount, and the proceeds of
any investment thereof, shall, to the extent not applied to such obligations of
the Lessee, be paid to the Lessee to the extent provided in such Lease.
SECTION 3.03. Payment After Indenture Event of Default, etc. Except as
---------------------------------------------
otherwise provided in Sections 3.04(c) and 3.05(ii), all payments received and
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 after the Indenture Trustee has received a request in
accordance with the first sentence of Section 5.02(b) or after the Indenture
Trustee shall foreclose or enforce this Indenture or after the Certificates
shall have become due and payable as provided in Section 4.04(b) or (c), as well
as all payments or amounts then held by the Indenture Trustee as part of the
Indenture Estate or Collateral, 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
-----
reimburse the Indenture Trustee for any tax, expense, charge or other loss
(including, without limitation, all amounts to be expended at the expense
of, or charged upon the tolls, rents, revenues, issues, income,
TRUST INDENTURE
52
products and profits of, the property included in the Indenture Estate
pursuant to Section 4.05(b)) incurred by the Indenture Trustee (to the
extent not previously reimbursed) (including, without limitation, the
expenses of any sale, taking or other proceeding, reasonable attorneys'
fees and expenses, court costs, and any other expenditures incurred or
expenditures or advances made by the Indenture Trustee in the protection,
exercise or enforcement of any right, power or remedy or any damages
sustained by the Indenture Trustee, liquidated or otherwise, upon such
Indenture Event of Default) shall be applied by the Indenture Trustee in
reimbursement of such expenses;
second, so much of such payments or amounts remaining as shall be
------
required to pay in full to the holders of Series A Certificates all other
amounts payable pursuant to the indemnification provisions of Sections 8.1
and 8.2 of any Participation Agreement or pursuant to any other provision
of any Operative Agreement and secured hereunder (other than amounts
payable pursuant to clause "third", "fourth", "fifth" or "ninth" of this
----- ------ ----- -----
section 3.03) to the holders of series a Certificates and remaining unpaid
shall be distributed to such holders, and if the aggregate amount remaining
shall be insufficient to pay all such amounts in full, it shall be
distributed ratably, without priority of any Series A Certificate over any
other, in the proportion that the aggregate amount due each holder of
Series A Certificates under this clause "second" bears to the aggregate
------
amount due all holders of Series A Certificates under this clause "second";
------
third, so much of such payments or amounts remaining as shall be
-----
required to pay in full the aggregate amount of all due but unpaid Premium
Amount (other than Special Premium), if any, and all accrued but unpaid
interest to the date of distribution on the Series A Certificates shall be
distributed to the holders of the Series A Certificates, and if the
aggregate amount remaining shall be insufficient to pay all such amounts in
full, it shall be distributed ratably, without priority of any one Series A
Certificate over any other, in the proportion that the aggregate amount of
all due but unpaid Premium Amount (other than Special Premium), if any, and
all accrued but unpaid interest to the date of distribution on each Series
A Certificate bears to the aggregate amount of all due but unpaid Premium
Amount
TRUST INDENTURE
53
(other than Special Premium), if any, and all accrued but unpaid interest
to the date of distribution on all Series A Certificates;
fourth, 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 Certificates shall be distributed to the holders of the Series A
Certificates, and if the aggregate amount remaining shall be insufficient
to pay all such amounts in full, it shall be distributed ratably, without
priority of any one Series A Certificate over any other, in the proportion
that the aggregate unpaid principal amount of each Series A Certificate
bears to the aggregate unpaid principal amount of all Series A
Certificates;
fifth, so much of such payments or amounts remaining as shall be
-----
required to reimburse all holders of the Certificates in full for payments
made pursuant to Section 5.03 (to the extent not previously reimbursed)
shall be distributed to such holders, and if the aggregate amount remaining
shall be insufficient to reimburse all such payments in full, it shall be
distributed ratably, without priority of any Certificate over any other, in
the proportion that the aggregate amount of the unreimbursed payments made
by each such holder pursuant to Section 5.03 bears to the aggregate amount
of the unreimbursed payments made by all holders of Certificates pursuant
to Section 5.03;
sixth, so much of such payments or amounts remaining as shall be
-----
required to pay to the holders of Series B Certificates all other amounts
payable pursuant to the indemnification provisions of Sections 8.1 and 8.2
of any Participation Agreement or pursuant to any other provision of any
Operative Agreement and secured hereunder (other than amounts payable
pursuant to clause "fifth", "seventh" or "eighth" of this Section 3.03) to
----- ------- ------
the holders of Series B Certificates and remaining unpaid shall be
distributed to such holders to, and if the aggregate amount remaining shall
be insufficient to pay all such amounts in full, it shall be distributed
ratably, without priority of any Series B Certificate over any other, in
the proportion that the aggregate amount due each holder of Series B
Certificates under this clause "sixth" bears to the aggregate amount due
-----
all holders of Series B Certificates under this clause "sixth";
-----
TRUST INDENTURE
54
seventh, so much of such payments or amounts remaining as shall be
-------
required to pay in full the aggregate amount of all accrued but unpaid
interest to the date of distribution on the Series B Certificates, shall
be distributed to the holders of the Series B Certificates, and if the
aggregate amount remaining shall be insufficient to pay all such amounts
in full, it shall be distributed ratably, without priority of any one
Series B Certificate over any other, in the proportion that the aggregate
amount of all accrued but unpaid interest to the date of distribution on
each Series B Certificate bears to the aggregate amount of all accrued but
unpaid interest to the date of distribution on all Series B Certificates;
eighth, 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 Certificates shall be distributed to the holders of the Series B
Certificates, and if the aggregate amount remaining shall be insufficient
priority of any one Series B Certificate over any other, in the proportion
that the aggregate unpaid principal amount of each Series B Certificate
bears to the aggregate principal amount of all Series B Certificates;
ninth, so much of such payments or amounts remaining as shall be
-----
required to pay in full the aggregate amount of all due but unpaid Special
Premium, if any, shall be distributed to the holders of the Series A
Certificates, and if the aggregate amount remaining shall be insufficient
to pay all such amounts in full, it shall be distributed ratably, without
priority of any one Series A Certificate over any other, in the proportion
that the aggregate amount of all due but unpaid Special Premium, if any,
bears to the aggregate amount of all due but unpaid Special Premium, if
any, on all Series A Certificates; and
tenth, 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 3.04. Certain Payments. (a) Except as otherwise provided in
----------------
this Indenture, any payments received by the Indenture Trustee for which
provision as to the application thereof is made in any Lease or any
Participation Agreement shall
TRUST INDENTURE
ANNEX II
to
Amendment and Restatement
of Trust Indenture and
Security Agreement
Schedule of Series B Certificates Principal Payments
----------------------------------------------------
Payment Date Principal
(Interest Payment Amount to
Date Closest to) Be Paid
---------------- -------
31-Mar-92 $111,611.17
30-Jun-92 $113,746.88
30-Sep-92 $113,445.68
31-Dec-92 $115,640.35
31-Mar-93 $122,736.68
30-Jun-93 $122,655.68
30-Sep-93 $122,624.73
31-Dec-93 $124,996.98
31-Mar-94 $132,066.97
30-Jun-94 $132,268.18
30-Sep-94 $132,528.82
31-Dec-94 $135,092.67
31-Mar-95 $142,134.25
30-Jun-95 $142,639.96
30-Sep-95 $143,215.22
31-Dec-95 $145,985.80
31-Dec-99 $9,955,302.21